Derivatives Course

About Financial Derivatives (Options & Futures) Course

Notice: Fee Increase Effective January 1st, 2024 After careful consideration and evaluation of various factors, including operational costs and enhancements in our academic offerings, there will be an adjustment in the course fees. Please note that there will be a surge of up to 20% in the fees for all our courses starting from January 1st, 2024.

Introduction to financial derivatives analysis course

Firstly, This introductory Derivative Analysis Course will teach you the fundamentals you need to know. Furthermore, You’ll understand how to tell the difference. Clearly, Between forward, futures, options, and swaps contracts. Meanwhile, You’ll also use Excel to compute profits & losses for various contract types too.

Also, By the end of this course, you’ll have a fundamental understanding of derivative contracts. Again, you’ll need to go on to more advanced topics like derivatives pricing. Along with, trading in the derivatives market.

Language: English & Hindi l Time Duration: 1.5 Months l Fees: 17,000

Meanwhile, Let us give you some theoretical knowledge

Importantly, These Derivatives are a type of financial instrument that has been around for a long time. The first futures contracts, for example, may be traced back to Mesopotamia in the second millennium BC. Yet, until the 1970s, the financial instrument was not employed. Definitely, The introduction of new valuation techniques propelled the derivatives market’s rapid growth. We can’t imagine modern finance without derivatives nowadays.

What are derivatives

Whereas,

Financial derivatives are contracts whose value is based on the value of an underlying asset or group of assets. Alternatively, Stocks, bonds, currencies, commodities, and market indices are all common assets. In particular, The underlying assets’ value fluctuates in response to market conditions. Moreover, Entering into derivative contracts is based on the idea of making money. Especially, by speculating on the value of the underlying asset in the future.

Consider the possibility that the market price of an equity share will rise or fall. A decrease in the value of your stock could result in a loss.

Why do investors engage in derivatives trading?

You can enter a derivative contract, in this case, to generate gains by placing an appropriate bet. Alternatively, you might simply protect yourself from losses in the spot market where the stock is traded.

Arbitrage benefit

Nonetheless,

Buying a commodity or investment at a cheap price in one market and selling it in another market is known as arbitrage trading. It should be noted, it is regardless of profit or loss. Also, You enjoy the differential in commodity prices between the two marketplaces also.

Market volatility protection:

Moreover,

If the price of an asset fluctuates, your chances of losing money increase. Thus, You can use the derivatives market to find products that will help protect against a drop in the price of equities. Overall, In the case of equities that you want to get, you can also buy goods to protect against a price increase.

Surplus funds

In fact, Some people use derivatives to move risks and park their extra funds. Others, but, use it to speculate and profit. You can profit from price swings without selling the underlying shares in this way.

Who is involved in the derivatives market?

Hedgers

For this reason, These are stock market, risk-averse traders. In short, They use derivatives markets to protect their investment portfolio. from market risk and price fluctuations. To clarify, They do this by taking the opposing side of the derivatives market. Especially, They pass the risk of loss to those who are willing to accept it in this way. Obviously, They must pay a premium to the risk-taker in exchange for the available hedging.

For example

You own 100 shares of XYZ corporation, which are now trading at Rs. 120 each. Subsequently, After three months, you want to sell these shares. However, you don’t want to lose money if the market price drops. Apart from this, At the same time, you don’t want to miss out on a chance to profit from selling.

Speculators

Also, These are derivative market risk-takers. Without a doubt, They desire to take on retailers to make money. In comparison to the hedgers, they have a completely different viewpoint. Obviously, If the bets turn out to be correct, this difference of opinion allows them to make a lot of money. In the case above, you purchased a put option to protect yourself against a drop in stock prices. Besides, The speculator, who is your counterparty, will wager that the stock price will not decline. Lastly, You will not exercise your put option if the stock prices do not decline. As a result, the speculator maintains the premium and profits.

Margin traders

To summarise, The least amount you must deposit with the broker to take part in the derivative market is referred to as a margin. Altogether, It is used to reflect your daily losses and gains as a result of market fluctuations. Lastly, It allows you to get leverage in derivative transactions while maintaining a large open position.

What Are The Different Types Of Derivative Contracts

Options

So, A financial instrument is dependent on the value of underlying securities. For example, stocks are referred to as an option. Or, An options contract gives the buyer the choice to buy or sell the underlying asset. Contrary to depending on the contract type. In contrast to futures, the holder is not obligated to get or sell the asset if they choose not to. Undoubtedly, Each contract will provide a deadline by which the holder must exercise his or her option. Especially, The strike price of an option is the stated price of the option. Online or retail be commonly used to buy and sell options.

Futures

Correspondingly,

Futures are financial derivatives that bind the parties to trade an item at a fixed price. On the date in the future. Likewise, Regardless of the prevailing market price at the end date. Thus buyer or seller must buy or sell the underlying asset at the predetermined price.

Therefore, Physical commodities or other financial instruments are examples of underlying assets. Proof of this Futures contracts specifies the quantity of the underlying asset. Furthermore, they are standardised to make futures trading easier. In the Last, Futures can be utilised for trading speculation or hedging.

Forwards

Up to a point, A forward contract is a tailored agreement between two parties to get or sell an item. Obviously, at a predetermined price at a later period.

In short, A forward contract can be used for hedging or speculation. It should be noted, that because of its non-standardized character, it’s best for hedging.

For example, Grain, precious metals, natural gas, oil, and even poultry of commodities are exchanged. In short, A forward contract might be settled in cash or in the form of delivery.

Forward contracts are considered over-the-counter (OTC) instruments. Clearly, they are not traded on a centralised exchange. While the lack of a centralised clearinghouse makes it easier to change terms. Obviously, the lack of a centralised clearinghouse also increases the possibility of default.

Swaps

swaps

A swap is a contract between two parties to trade cash flow sequences for a specified period of time. At least one of this series of cash flows is usually set by a random or unpredictable variable at the time the contract is initiated, such as an interest rate, foreign exchange rate, equities price, or commodity price.

A swap can be thought of as a portfolio of forward contracts or as a long position in one bond combined with a short position in another. Interest rate and currency swaps are the two most prevalent and fundamental forms of swaps discussed in this article.

Equity Derivatives Certification curriculum

Speak to the Counsellor

I. Basics of Derivatives

A. Basics of derivatives
B. Evolution of derivatives m
C. Indian derivatives Market
D. Market participants
E. Types of derivatives market
F. Significance of derivatives
G. Various risks faced by the participants in derivatives

II. Understanding Index

A. Introduction to Index
B. Significance and economic purpose
C. Types of Indices
D. Attributes of an Index and concept of impact cost
E. Index management
F. Major Indices in India
G. Applications of Index

III. Introduction to Forward

A. Introduction to Forwards
B. Payoff Charts for Futures contract
C. Futures pricing
-Cash and carry / Non-arbitrage model for futures pricing
-Expectancy model of futures pricing
-Concept of convergence of cash and futures prices
D. Basic differences in Commodity, Equity
E. Uses of futures
-Role of different players in futures market
-Use of futures contract as an effective instrument for managing
-Strategies for hedging, speculation and arbitrage in futures market

IV. Introduction to Options

A. Basics of options
B. Payoff Charts for Options
C. Basics of options pricing and option Greeks
Fundamentals of options pricing
Overview of Binomial and
Basics of Option Greeks
Uses of Options

V. Option Trading Strategies

A. Option spreads and their payoff charts
B. Straddle: market view and payoff charts
C. Strangle: market view and payoff charts
D. Covered Call: market view and
E. Protective Put: market view and payoff charts
F. Collar: market view and payoff charts
G. Butterfly spread: market view and payoff charts

VI. Introduction to Trading Systems

A. Trading Systems, corporate hierarchy, order types and conditions
B. Selection criteria of Stock for trading
C. Selection criteria of Index for trading
D. Adjustments for Corporate Actions
E. Position Limits
F. Using daily newspapers to track futures and options

VII. Introduction to Clearing

A. Clearing Members, their role and
B. Clearing Mechanism and computation of open positions
C. Settlement Mechanism for stock and index futures and options
D. Understanding margining and mark to market under SPAN
E. Risk Management features and position limits

VIII. Legal and Regulatory Environment

A. Securities Contract (Regulation) Act, 1956
B. Securities and Exchange Board of India Act, 1992
C. Important rules and regulations
D. Regulation in clearing
E. Major recommendations

IX. Accounting and Taxation

A. Accounting of Futures and Options contracts
B. Taxation of Derivative transaction in securities

X. Sales Practices and Investors Protection Services

A. Risk profile of the investors
-Importance of profiling clients in the sales process
-Importance of KYC
-Documents required by the investors to trade in a Derivatives contract
-Best practices in derivatives sales
B. Investors Grievance Mechanism

Who Is Eligible to Take a Derivatives Market Course?

Stockbrokers, Full-time stock traders, Portfolio managers, Equity Dealers, Research Analysts, and Risk and Compliance Managers.

Other courses

Shark Trader course

Basics of stock market

Technical Analysis

Fundamental Analysis

Mutual funds

To learn more about the course, you can speak to one of our trading students or simply Walk into the institute.

Appreciation Week!

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