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Dilfraz Singh, Lovely Professional University Unit 8: Derivatives
Unit 8: Derivatives Notes
CONTENTS
Objectives
Introduction
8.1 Characteristics of Derivatives
8.2 Hedging
8.3 Portfolio Rebalancing
8.4 Myths and Realities about Derivatives
8.5 Derivative Products
8.5.1 Forward Contract
8.5.2 Futures Contract
8.5.3 Options
8.6 Summary
8.7 Keywords
8.8 Self Assessment
8.9 Review Questions
8.10 Further Readings
Objectives
After studying this unit, you will be able to:
Define future contracts
Discuss future of a future contract
Understand mechanics of future trading
Explain forwards vs futures contract
Discuss trading in future contracts
Explain concept of basis in futures market
Define options
Analyze how options work
Discuss options strategies
Explain call options, put options, writing options
Discuss factors deterring option values
Explain Option Valuation Model
Understand Binomial Model
LOVELY PROFESSIONAL UNIVERSITY 217
