FIN351 The Derivatives Market

The derivatives market has grown in size over the past century, with the value of derivatives exposures dwarfing that of stock and bond exposures. This subject provides students with knowledge of derivative products and markets including market structure, participants and the products used for managing risk and/or trading for profit.

In this subject, students will gain the skills to analyse, price and trade forwards, futures, swaps and options. The subject focusses on key markets for these contracts including derivative exposures over equities, interest rates, foreign exchange and commodities.

This subject contributes to the investment analysis and financial risk management majors.

For more information, please refer to the subject outline.

  • Learning Outcomes
    • On successful completion of this subject, students should be able to:

      1. Assess the different types of derivative securities and instruments.
      2. Analyse the structure, processing and regulatory framework of derivatives markets.
      3. Value derivative exposures and construct options trading strategies.
      4. Construct hedging, arbitrage and speculative trading strategies using equity derivatives.
      5. Construct hedging, arbitrage and speculative trading strategies using short and long-term interest rate derivatives.
      6. Construct hedging, arbitrage and speculative trading strategies using FX and commodity derivatives.
  • Subject Content
    • Topic Title
      Topic 1 Introduction to derivative securities and instruments
      Topic 2 Trading in derivatives
      Topic 3 Pricing of forwards, futures and swaps
      Topic 4 Options pricing
      Topic 5 Options trading and strategies
      Topic 6 Equity derivatives
      Topic 7 Interest rate derivatives- short-term
      Topic 8 Interest rate derivatives- long-term
      Topic 9 FX derivatives
      Topic 10 Commodities

  • Assessment
  • Recommended prerequisites
    • Students enrolling in this subject are assumed to have the prerequisite knowledge in the three core subjects (FIN101FIN102, FIN103). 

  • Course transition subject equivalence
    • Students are not required to complete this subject if they have transitioned from a SIA/Finsia/Kaplan course and have completed the following subjects within the course completion timeframe:
      • E113 Options Markets and Trading
      • FIN229 Options Markets and Trading
      • FIN329 Futures and Options Markets and Trading

  • Reading list
    • There is no prescribed text for this subject. Students will be provided with key readings and access to Kaplan’s online databases. Students are encouraged to research and read widely on the topic.