Coming soon
Financial Derivatives
Course Objective:
To acquire understanding about quantitative techniques and strategies used for pricing the main financial derivatives available for trading in financial markets.
Course Outcome (COs):
|
Course |
Learning outcome (at course level) |
Learning and teaching strategies |
Assessment Strategies |
|
|
Paper Code |
Paper Title |
|||
|
FMG 616 |
Financial Derivatives |
CO222 Student will be able to describe standard derivative contracts, their properties and functionality. CO223 Analyze the payoff structure and strategies of derivative contracts (futures and forwards) for different underlying securities (e.g., stocks financial indices, foreign exchange, commodities). CO224 Construct and evaluate Option strategies for risk management purposes. CO225 To explore the benefits and use of currency and interest rate swaps. CO226 To make student comprehend about the trading mechanism of derivatives instruments as well its legal framework. |
Approach in teaching: Interactive Lectures, Discussion, Tutorials, Practical cases Demonstration, Power point presentation. Learning activities for the students: Self learning assignments, Effective questions, Seminar presentation, Live practical problems analysis |
Class test, Semester end examinations, Quiz, Solving problems in tutorials, Assignments, Presentation, Individual and group projects |
Basics of Derivatives-Evolution of derivatives market, Indian derivatives Market, Market participants, Types of derivatives markets, Significance of derivatives, Market participants and their roles in the derivatives markets, OTC and Exchange Traded Market..
Introduction to Forwards contracts- Meaning of Forwards contract, Features of Forward contract Advantages disadvantages of forward contract, Difference between forward and spot contract, Working of Forward contract, and classification of forward.
Introduction to Future Contract: Meaning, features of Future contract, Advantages and disadvantages, Comparison between forward and future contract. Strategies for hedging, speculation and arbitrage in futures market. Future market operational guidelines.
Introduction to Options- Concept, features, Types of options, Distinction between options and futures Option Trading Strategies- Option spreads , Straddle, Strangle, Covered Call, Protective Put, Butterfly spread.
Swaps: Meaning, features, Advantages and disadvantages of swaps, Types of swaps.
Currency Swaps- definition, features, and uses.
Interest rate swaps- definition, features and Types.
Economic motive for Swaps.
Trading , clearing and settlement System of derivative market
Legal and Regulatory Environment-Securities Contract (Regulation) Act, 1956, Securities and Exchange Board of India Act, 1992, Important rules and regulations in derivatives trading, Regulation in clearing & settlement and risk management
• Williams, Michacls, Fundamentals of Option Markets, Mc Graw Hill, New Delhi
• Hull, John, Introduction to Futures, Option market, Prentice Hall of India, New Delhi
• Redhead, Keith, Financial Derivatives- An Introduction to futures, forwards,option and swaps, Prentice Hall of India, New Delhi
• Bhole L.M., Financial Institutions and Markets, Tata Mc Graw Hill, New Delhi
• Pathak, Bharati V., Indian Financial System, Pearson Education, New Delhi.
• NCFM and NISM Modules.
• Prafulla Kumar Swain, Financial Derivatives, Himalaya Publishing House.
