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.
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