Derivatives Futures and Options- Course Outline

Trimester- IV
Faculty Detail:

Yatindra Ranade BSc Phy, BA Eco, CMT II

Branch Head Sharekhan Ltd , SahakarNagar

yat33dra@gmail.com

+91-9823555310
Course Objective : This module has been prepared with a view to equip candidates with
basic but essential information and concepts regarding the DERIVATIVES in various markets.

Candidates appearing for Professional Certifiaction from NISM/NCFM will find this course
extremely beneficial

Evaluation Details:

Course Description

The course is intended to provide the students with a strong knowledge of derivative
securities (forwards, futures, options, and swaps) and the use of these securities to manage
the price risk. Students taking the course must have a solid understanding of the concepts in
several fields, namely, finance and economics.

Textbook: John C Hull: Options, Futures, and Other Derivatives, Prentice-Hall 2012
(8e)

Session Topic Pre-reading

No
1 Introduction to risk and the basic Derivatives, Case Study 1: Portfolio
Meaning and Need, Management /Safety with
Growth of Financial Derivatives in India, Derivatives
Derivative Markets, Participants, Functions
Types of Derivative, Hull: chapter 1
Forwards, Futures, Options, Swaps, The
Regulatory Framework of Derivatives trading in
India.
2 Hedging, Speculation and Arbitrage, Derivatives
Market in India
Hull: chapter 3
3 Introduction to Futures Hull: chapter 2
Margin Requirements; Marking to Market
Type of orders
Forward vs Future contracts

4 Orders and Position Limits. Regulations Case Study 2:Trading in

governing Cash-Settled Future Contracts futures
Hull: chapter 2

5 Forward prices for Investment Assets Hull: chapter 5

Valuing forward contracts
Forward and future contracts on currencies
 Futures on commodities
6 Risk management with Future contracts Case Study 3:Hedging the
Should the firms hedge their risk? Basis and portfolio with respect to
Spread Index Future(Bank Nifty)
Cross hedging (Excel Based) Hull: chapter 3

7 Risk Management with Swaps Hull: chapter 7

Interest Rate Swaps
8 Currency Swaps Hull: chapter 7
Credit Default Swaps.

9 Class Presentations

10,11&12 Introduction to Options Hull: chapter 9

Types of options
Option positions
Intrinsic Value and Time Value
Underlying assets
Specification of option contract
Margin
Regulations
13 Hull: chapter 10
Put call parity

14,15 & Option Strategies and Profit Diagrams Hull: chapter 10

16 Profit diagram for options strategies
17 Black Scholes Merton Model Hull: chapter 14
18 Greek Letters Hull: chapter 18
19 Class presentation
20 Revision of semester work

2. COMPONENTS OF EVALUATION

1. Viva : 15%
2. Mock Trading & Application : 20%
3. Quizzes, Assignments : 35%
4. End Term Examination : 30%

3. SUGGESTED READINGS

NISM-Series-XIII: Common Derivatives Certification Examination Course Module

How to Make Money Trading Derivatives by Ashwini Gujral