Derivative Contracts: Futures, Forwards, Swaps, and Options


Overview/Description
Target Audience
Expected Duration
Lesson Objectives
Course Number


Overview/Description
A derivative contract, or derivative for short, is a bilateral contract that derives its value from an underlying security – a stock, bond, or a commodity – and is used for managing risks associated with these securities. Derivatives have seen a phenomenal growth over the past few decades. Traditionally, they are used for protecting banks, financial institutions, and traders from adverse movements in the price of financial instruments and commodities. In other words, derivatives are generally used for hedging purposes. However, more recently they have also been used by sophisticated investors to speculate on price movements of reference assets or to employ strategies for riskless profit, called arbitrage. In this course we examine some generally used categories of derivatives – futures, forwards, swaps, and options, and their applications. We examine pricing, margin requirements, mark-to-market, and cash flow calculations along with important considerations and characteristics of these products.

Target Audience
Financial services professionals, consultants, and sales professionals interested in providing or selling products and services to banks, investment companies, and other financial corporations, and everyone interested in understanding counterparty credit risks, and techniques for their mitigation

Expected Duration (hours)
1.0

Lesson Objectives

Derivative Contracts: Futures, Forwards, Swaps, and Options

  • differentiate between the types of major derivatives
  • differentiate between forward and future contracts
  • identify how margin is determined on futures contracts
  • recognize the fair value calculations for financial and non-financial futures
  • describe the basic features of forward and futures contracts
  • identify the different types of swap contracts
  • differentiate between types of option contracts
  • describe the basic features of swap and option contracts
  • Course Number:
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