Derivative Finance

Derivatives are considered one of the most complex Financial Instruments and it is becoming increasingly popular in the world of finance.

Those who work in finance, need to understand how derivatives work, how they are used and how they are priced. So, here we decode it for you.

Topics Covered :-

1) Introduction to Derivative.

2) Market Participants in Derivative :-

✓ Hedgers

✓ Speculators

✓ Arbitrageurs

3) Futures and Forward Contract

4) Margin on Futures Contract

✓ Initial Margin

✓ The Maintenance Margin

✓ The Variation Margin or Mark-To-Market Margin

5) Futures Contract Pricing

✓ The Cost of Carry Model

✓ The Expectancy Model

✓ Futures Basis

6) Option Introduction

7) Option Styles :

✓American Option

✓European Option

8) Option Moneyness

✓ In-The-Money

✓ At-The-Money

✓ Out-Of-The-Money

9) Types of Options:-

✓ Call Option

✓ Put Option

10) Options Pricing

✓ Intrinsic value

✓ Time value

11) Swap Introduction and types:-

✓ Interest Rate Swap

✓ Total Return Swap

✓ Credit Default Swap

✓ Currency Swap

✓ Commodity Swap

Reference:

Investopedia

Kotaksecurities

Financial Derivatives: Theory, Concepts and Problems by S. L. GUPTA

Options, Futures and Other Derivatives by John C. Hull