Financial Derivatives

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Course TypeCourse CodeNo. Of Credits
Foundation ElectiveSBP2MB5012

Semester and Year Offered: Second Year

Course Coordinator and Team: Nidhi Kaicker

Email of course coordinator: nidhi[at]aud[dot]ac[dot]in


Aim: The objective of this course is to introduce the participants to derivative instruments, namely, forwards, futures, options and swaps, and their valuation. The participants are expected to carefully go through the pre class readings before each session to facilitate an interactive discussion in the class. They are also requested to bring their calculators, preferably scientific calculators to the sessions.

Course Outcomes:

On successful completion of this course, the participants will be able to:

  1. Demonstrate knowledge of all aspects of derivative market theory and the roles they play in the financial markets
  2. Identify how derivative instruments can be used to change or hedge risk and evaluate risks and pay-offs associated with trading such instruments and their implications
  3. Understand the basic risk management and trading strategies using futures and options
  4. Critically evaluate the techniques used to value options and the factors that determine valuation

Brief description of modules/ Main modules:

  1. Unit 1: Introduction to Derivatives
  2. Unit 2: Futures & Forwards: Pricing and Hedging
  3. Unit 3: Trading Strategies using Options
  4. Unit 4: Option Pricing

Assessment Details with weights:

  • Class Assignments 30%
  • Mid semester 40%
  • End semester 30%

Reading List:

  • Hull, J.C. (2018) Option, Futures and Other Derivatives, Pearson Publisher


  • Additional Readings and Cases for each session will be circulated prior to the commencement of the course.