Options, Futures, and Other Derivatives provides students with an understanding of how derivative products work, how they are traded, how they are used, and how they are valued. It covers forwards, futures, swaps and options. It explains both exchange-traded and over-the-counter markets. It covers both the binomial tree and Black-Scholes -Merton valuation models and discusses how financial institutions use “Greek letters” such as delta and gamma. Students will use the widely acclaimed DerivaGem software developed by the instructor and his colleagues.

• Instructor:Dr. John Hull, University of Toronto
• Start Date: Monday, June 03 2013
• Duration: 7 weeks
• Difficulty: Introductory

By the end of the course students will understand the nature of derivative products. They will have a good knowledge of how derivatives are used, how they are priced, and how financial institutions hedge their risks when they trade these products. They will be introduced to derivatives software developed by the instructor and his colleagues and will be in a position to develop their own software if they have the necessary skills and wish to do so. Key concepts in derivatives pricing theory such as risk neutral valuation and no-arbitrage pricing will be explained carefully. The course starts by covering forwards and futures which are relatively simple derivatives. It then moves on to consider swaps, which are portfolios of forward contracts. After that it covers options, which are more complicated.

The textbook for the course is “Options, Futures, and Other Derivatives” 8th edition written by the instructor, John Hull. Students may also find the Solutions Manual accompanying the book useful. This contains answers to the Practice Questions at the end of each chapter. There are 4 to 5 modules each week for seven weeks. Slides accompany each module. The precise background reading for each module is specified as the course progresses.

Course Outline