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Futures, Options and Structured Products Training

An introduction to futures, options and structured products

Futures, Options and Structured Products Training Course

A two-day course

  • A practical insight into how Futures, Options and Structured Products are used in the “real world”
  • Examples of how Asset Managers use Futures and Options to Hedge Portfolios
  • Case studies showing how Traders and Asset Managers use Options to create higher yields and to enter the market at market-beating levels
  • Yield Enhancement strategies – selling covered calls
  • A thorough explanation of how Futures work in a practical day today basis to speculate and hedge risk
  • STIRS and Futures Strips are used by all banks to manage their interest rate risk. We give simple examples and exercises to show how this critical trading operates in a Bank
  • Options Trading explained. From the basic terminology to the strategies employed by banks and their clients
  • Options strategies – how they work in practice
  • What are Structured Products and how are they created

  • To provide a complete understanding of the properties and risk profiles of Futures, Options and Structured derivative products
  • To provide participants with a thorough understanding of the applications of these derivatives so that they have the ability to advise their clients on strategies that may be used to meet specific investor requirements
  • To provide participants with a thorough but easy to understand knowledge of the basic pricing techniques used in derivatives.
  • To provide participants with a good understanding of how options are priced and used in the market to hedge and speculate.
  • To explain the different types of option strategy available and to appreciate the different risk profile that options have compared to Delta One products.
  • Gain an appreciation of how Options can be used in Structured Products to provide required returns for Clients … and Profits for Banks

Day 1

Futures Arbitrage

  • Cash
  • Futures and Forwards

Introduction to Futures and Options

  • The History and Development of the Market
  • Definitions
  • Over-the-Counter (OTC) versus Exchange Traded Products
  • The Role of The Clearing House /CCP

Margining

  • Trading
  • Novation of Contract
  • Initial Margin
  • Variation Margin
  • Intra-day Margin Call
  • Gearing

Pricing and Valuing Futures

  • Basic Futures Mechanism
  • Pricing Futures through Cash and Carry Arbitrage
  • The Value Basis
  • The Carry Basis
  • The Importance of Credit

Specialities with Futures Contracts

  • Cash Settlement
  • Physical Delivery

Types and Uses

  • Speculating and Hedging with Index and Individual Stock Futures
  • Examples and Exercises

Short Term Interest Rate Futures (STIRS)

  • Interest Rate Futures
  • Trading and Hedging
  • Hedging the “Interest rate Gap Risk”
  • Futures Strips

Bond Futures

  • Using Bond Futures
  • Trading and Hedging

Day 2

Options and Structured Products

Introduction to Options

  • Definitions
  • Calls and Puts
  • Option Terminology

Using Options to

  • Gear up / Leverage
  • Speculate
  • Hedge
  • Arbitrage

Option payoffs

  • Hockey Stick Diagrams
  • Profit and Loss Calculations

Option Trading Strategies

  • Put-Call Parity
  • Straddles
  • Strangles
  • Bear Spreads
  • Bull Spreads
  • Butterflies

A Simple Approach to Option Pricing Volatility

  • The Binomial Model
  • The Black & Scholes Model
  • The Greeks (Risk measures)
  • Delta, Gamma, Theta, Vega and Rho explained

Case Study: Managing the Risks

  • Delta-hedging your Option Positions
  • Delta Hedging Simulation
    • Participants analyse the hedge as markets move and give feedback on its effectiveness

Description of Exotic Options

  • Barrier Options
  • Knock-in and Knock out Options
  • Lookback Options
  • Best of two (Digital)

Option-based Structured Products

  • Participation
  • Guaranteed Return Products
  • Yield enhancement

Case Study: Creating Structured Products

  • Participants now have the skills to create their own Structured Products
  • In groups they create and explain their Structured Products to the group
  • Examples of what they will produce are
    • Stock Market Return - 100% Capital Guaranteed Products
    • Stock Market Income Fund
    • Dual Currency Deposits
    • Range Accruals

Interest Rate Risk Management

  • Caps, Floors and Collars
  • Swaptions
  • Hedging Using Interest Rate Products
  • Putting Financial Instruments into Context

The trainer worked in Investment Banks including HSBC and Bank of Montreal for nearly 20 years. During this time, he worked in Operations and then as a trader, running books in FX, bonds and derivatives.

The trainer has run courses all over the world including Amsterdam, Dublin, London, New York, Hong Kong, Singapore, Jakarta, Johannesburg, Delhi, Accra, Johannesburg etc.

The trainer delivers courses which focus on providing a practical and in-depth understanding of the markets from a Trading, Operations and Risk viewpoint. His courses are interactive and stimulating, offering delegates the opportunity to participate in an environment which encourages free discussion of the real issues faced in the workplace.

In addition to his training activities, he has undertaken various consultancy projects, such as an in-depth collateral risk assessment at a major European Investment bank.

The trainer held the position of Non-Executive Director of Cazenove’s Derivative Oversight Committee for many years. Acting as a member of the committee in a general consultative capacity to assess the firm’s derivative capabilities and risks.

The trainer has also presented at JPMorgan Forums in London, speaking on topics such as the Benefits and Risks of Derivatives. He along with representatives from the FSA, law firms, hedge funds etc. were asked to give their views on the risks of derivatives to 150 / 200 Directors and senior managers from the top investment firms in the UK.

Financial Derivatives have played an increasingly important role since their introduction.  In some markets, they actually have become the driving force behind the movements in cash markets.  Obviously, a foundation in this area is mandatory.

Have this course presented In-House

  • On a date, time and in a location of your choice
  • Topics expanded or deleted to your bespoke requirements
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Have this course pre-recorded

  • Full course recording edited exclusively for your company
  • Files converted to enable housing on your LMS
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