Understanding Derivatives - 3 Days
Oct 2010 London. Dubai - dates tba
Description
This three day course is designed to provide a practical and sound introduction to the derivatives instruments. Delegates will be taken through all types of derivatives including forwards, futures, options and swaps where their constuction and uses will be explained in detail. The course will explain risk management applications as well as pricing fundamentals.
This course is build around practical exercises and case studies and is an excellent introduction to derivatives markets.
Course Level: General (no previous derivatives knowledge is required)
Main Topics Covered During This Training
- Overview of the current derivatives market
- Defining derivatives and their function
- Explaining forwards and forward rate agreements FRAs
- Short-term interest rate futures
- Credit derivatives
- Pricing swaps
- Uses of interest rate and currency swaps
- Futures of government bonds
- Defining and pricing options
- Interest rate and currency options
- Equity options
What Will You Learn By The End Of This Training
By the end of this training you will:
- Gain a sound practical understanding of derivatives instruments
- Know the fundamental applications of swaps, forwards, futures and options as well as credit derivatives and equity options
- Be able to use relevant pricing strategy
- Estimate risk and return measures in fixed income portfolios
- Construct a pay/off profile of different options
- Understand trading and hedging techniques for options
Who Should Attend
Anyone who has some exposure to derivatives and wants to understand fundamental types, uses and pricing strategies.
Teaching Method
This is a very interactive course with many exercises, classroom discussions and case studies.
You will benefit from comprehensive take away course documentation.
In order to help us establish your individual and business concerns, you will be asked to fill pre-course questionnaire.
Because of the nature of the course the number of places is limited and will be filled on first come, first accepted basis. We advise to book in advance in order to avoid disappointment.
Delegates are expected to bring a laptop with Microsoft Excel. If necessary, we can provide a laptop for an additional fee.
Course Level: General. No previous derivatives knowledge is required.
UNDERSTANDING DERIVATIVES - A THREE DAY PROGRAMME
DAY 1
The Derivatives Market
- Define derivatives and their function
- Growth of themarket
- Products available
- Understanding the risks
Case Study: Applying derivatives structures onto a risk grid
Forward: Forward Interest Rates and Forward Rate Agreements (FRAs)
- Deriving the forward-forward rate with cash instruments
- Forward rate agreements (FRAs)
- Calculating the settlement sum
Case Study: Delegates will hedge a position using FRAs
Short-Term Interest Rate Futures
- Background to the futures market
- LIFFE’s Euribor contract
- Exchange and clearing house functions
- Margin accounts
Video: Chicago Board of Trade (CBOT)
Credit Derivatives
- Market size, trends and motivation
- Reference assets; Events of Default; and Documentation Issues
- Products - Default and spread options; Credit Linked Notes; Total Return Swaps; Basket trades
Case Study: Using Credit Derivatives to improve risk returns
DAY 2
Introduction to Swaps Markets
- Market overview
- Comparative advantage and the classic swap
- Swap price quote conventions
- Converting from one price quoting basis to another
Case Study: Interest rate swap exercises
Interest Rate & Currency Swaps
- Background to the plain vanilla swap
- Rationale for cross currency swaps
- Cross currency basis swaps
- Practical considerations
Case Study: Arbitrage in fund raising
Futures on Government Bonds
- The contract specification
- Conversion/price factors
- Finding the cheapest to deliver bond – implied repo rates
- Risk and return measures in fixed income portfolios
- Understanding the basis
Case Study: Delegates will work with bond software to understand what drives the futures price
DAY 3
Options
- Definition of an option types available
- Payoff profiles
- Premium determinants
- Pricing models
Case Study: Delegates will construct the pay/off profiles of given options
Interest rate options
- Borrowers and lenders options
- Caps, floors and collars
- Premium payment amount and the impact of cost of carry
- Break even rates
Case Study: Delegates will use an interest rate options and calculate the break even rates
Currency options
- Pricing conventions
- Premium payment calculation
- Break even rates
- Using cost of carry rates
Case Study: Delegates will compare the advantages of leaving positions, dealing forward foreign exchange or foreign exchange options
Equity Options
- Introduction and terminology
- Intrinsic and Time Values
- Payoff Profiles
- Options as a Hedging or Trading instrument
Case Study: Trading Strategies - Straddles and Strangles
Paul North
Paul has over 20 years experience of working and teaching in the financial and derivatives industry. Paul joined the London International Financial Futures and Options Exchange (LIFFE) in 1988, spending several years on the exchange trading floor before transferring to LIFFE’s Business Development Department.
During his time at LIFFE, Paul worked in the fields of broker relations, product research and development, marketing, market automation and education. Paul was Head of Education at LIFFE, before leaving in Dec 1998 to pursue a freelance career in financial education and consultancy.
Paul is also a qualified teacher and has extensive speaking experience both in the UK and abroad, covering all the major aspects of financial markets. Paul has taught delegates from virtually all of the worlds leading investment banks, funds and trading houses.
Oct 2010 London - 3 Day Course
Early Bird till 31 of August £1895 +VAT
Regular Price: £2095 + VAT
5% discount for a booking of 2 and 10% for a booking of 3.
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Dubai - dates tba
Contact us to find out about the next edtion of this course
Early Bird - £1950/2095
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DISCOUNTS
- 2 people - 5% discount, 3 people - 10%. Delegates have to be from the same company and book at the same time.
- If you book for 2 courses at the same time you will receive 10% of the full value of the cheaper one.
IN-HOUSE TRAINING
If you have a team of 4 or more this course can be customised and organised in-house at your convenience in any of your offices worldwide. Contact one of our advisors to find out more.
Call us now on +44 (0) 207 193 5035 or
