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Derivatives (Reading 57. Derivative Markets and Instruments (Types of…
Derivatives
Reading 57. Derivative Markets and Instruments
Derivatives: Definitions and Uses
The Structure of Derivative Markets
3.1. Exchange-Traded Derivatives Markets
3.2. Over-the-Counter Derivatives Markets
Types of Derivatives
4.1. Forward Commitments
4.1.1. Forward Contracts
4.1.2. Futures
4.1.3. Swaps
4.14.2. Contingent Claims
4.2.1. Options
4.2.2. Credit Derivatives
4.2.3. Asset-Backed Securities
4.3. Hybrids
4.4. Derivatives Underlyings
The Purposes and Benefits of Derivatives
5.1. Risk Allocation, Transfer, and Management
5.2. Information Discovery
5.3. Operational Advantages
5.3. Operational Advantages
Criticisms and Misuses of Derivatives
6.1. Speculation and Gambling
6.2. Destabilization and Systemic Risk
Elementary Principles of Derivative Pricing
7.1. Storage
7.2. Arbitrage
Reading 58. Basics of Derivative Pricing and Valuation
Fundamental Concepts of Derivative Pricing
2.1. Basic Derivative Concepts
2.2. Pricing the Underlying
2.2.1. The Formation of Expectations
2.2.2. The Required Rate of Return on the Underlying Asset
2.2.3. The Risk Aversion of the Investor
2.2.4. The Pricing of Risky Assets
2.2.5. Other Benefits and Costs of Holding an Asset
2.3. The Principle of Arbitrage
2.4. The Concept of Pricing vs. Valuation
Pricing and Valuation of Forward Commitments
3.1. Pricing and Valuation of Forward Contracts
3.1.1. Pricing and Valuation of Forward Contracts at Expiration
3.1.2. Pricing and Valuation at Initiation Date
3.1.3. Pricing and Valuation during the Life of the Contract
3.1.4. A Word about Forward Contracts on Interest Rates
3.2. Pricing and Valuation of Futures Contracts
3.3. Pricing and Valuation of Swap Contracts
Pricing and Valuation of Options
4.2. Binomial Valuation of Options
4.3. American Option Pricing
4.1. European Option Pricing
Reading 59. Risk Management Applications of Option Strategies
Option Strategies for Equity Portfolios
2.1. Standard Long and Short Positions
2.1.1. Calls
2.1.2. Puts
2.2. Risk Management Strategies with Options and the Underlying
2.2.1. Covered Calls