Subject Outline

This subject will provide students with knowledge of the main types of options — exchange traded and over-the-counter —  and the markets on which they are traded. Students will learn how to price, analyse and trade options over a range of underlying instruments (eg. equities, futures and interest rate instruments), how to manage an option portfolio, and will examine some of the uses of options. Students will also cover the warrants market.

2008 Availability

Trimester 2

Study Modes

Lectures and distance education

Assessment Method and Weighting

• Assignment 40%
• Examination 60%

ASIC recognition

This subject has been recognised in the ASIC Register under Policy Statement 146.

Resource requirements

• Calculator
• Internet access

• Financial Markets and Economics (C1)
• Futures Markets and Trading (E112)

Learning outcomes

On successful completion of this subject students will be able to:

• outline the structure of the options markets
• construct specific options trading strategies
• evaluate simple option pricing models and their uses in options trading
• demonstrate the use of options in equity and interest rate options markets.

Content

• Introduction to options
• Option strategies
• Options pricing
• Uses of options
• Equity-based options
• Interest rate options
• Using interest rate options
• Understanding warrants