Derivatives Terminology: Futures, Forwards, Options, Settlement, Delivery, Open Interest, Pay Off Diagrams, Equity Futures and Options, Index Futures, Index Options. (4 hours)

Mechanics of Financial Derivatives: Evolution of derivatives markets in India and around the globe. Objectives of market participants. (5 hours)

Pricing of Derivatives - Futures: The Cost of Carry Models for Stock and Index Futures, Cash Price and Futures Price, Arbitrage Opportunity. (7 hours)

Pricing of Options: Factors Affecting Options Pricing, Binominal Pricing Model, The Black-Scholes Model, Pricing of Index Options. (14 hours)

Trading Strategies: Hedging, Speculation, Arbitrage, Straddle, Strangles, Strips and Straps, Spread Trading, Collar, etc. Portfolio risk, Value at Risk, SPAN margin requirements. Trading systems. Eligibility. (6 hours)

To understand the most commonly traded derivative Instruments in derivative market.

To learn about the role of derivatives in the modern capital markets, in particular for risk management.

To estimate the price of a simple derivative instrument.

At the end of module 1, the student will be able to 1) read the contract specifications of a derivatives product.

Explain the role of derivatives in speculation, hedging or arbitrage.

Estimate the price of a forward contract on equity or commodity.

Find out the price of a non-dividend paying stock using alternate methods.

Design a derivative strategy involving multiple instruments.

Hull, J. C. & Basu, S., Options, Futures and other Derivatives, Pearson Education , 7e +

Gupta, S. L., Financial Derivatives., Prentice Hall of India.

Chandra, P., Investment Analysis and Portfolio Management, Tata McGraw Hill.

Pandian, P., Security Analysis and Portfolio Management, Vikas Publishing House.