This advanced course provides comprehensive coverage of derivative instruments, focusing on pricing models, hedging strategies, and risk management applications in financial markets. Participants will explore options, futures, swaps, and structured products, learning to apply sophisticated pricing methodologies and develop effective risk management frameworks. The curriculum covers both theoretical foundations and practical applications, including the use of derivatives for speculation, hedging, and arbitrage across different asset classes. Through mathematical modeling, case studies, and trading simulations, learners will develop the expertise to price complex derivatives and implement sophisticated hedging strategies.
Derivatives: Pricing, Hedging, and Risk Management
Banking, Insurance and Financial Services
October 25, 2025
Introduction
Objectives
Upon completion of this course, participants will be able to:
- Price various derivative instruments using appropriate models
- Develop effective hedging strategies using derivatives
- Understand and apply the Black-Scholes model
- Manage portfolio risk using derivative instruments
- Identify arbitrage opportunities in derivative markets
- Structure complex derivative products
- Navigate regulatory requirements for derivatives
- Implement risk management frameworks
- Analyze Greek letters and their applications
Target Audience
- Risk Management Professionals
- Derivatives Traders
- Portfolio Managers
- Financial Engineers
- Quantitative Analysts
- Treasury Staff
- Investment Professionals
Methodology
- Pricing model implementation exercises
- Hedging strategy case studies
- Trading simulation games
- Risk management scenarios
- Mathematical modeling workshops
- Regulatory compliance exercises
Personal Impact
- Enhanced derivatives pricing skills
- Improved risk management capabilities
- Stronger mathematical modeling abilities
- Better trading strategy development
- Enhanced analytical thinking
Organizational Impact
- Improved risk management frameworks
- Enhanced trading profitability
- Better regulatory compliance
- Reduced financial losses
- Increased competitive advantage
Course Outline
Unit 1: Derivatives Fundamentals
Market Overview- Types of derivative instruments
- Market structure and participants
- Uses of derivatives in finance
- Regulatory environment overview
Unit 2: Futures and Forwards
Pricing and Applications- Forward pricing and cost of carry
- Futures contract specifications
- Hedging with futures
- Delivery and settlement mechanisms
Unit 3: Options Pricing
Valuation Models- Black-Scholes model derivation
- Binomial option pricing
- Volatility estimation techniques
- Exotic options pricing
Unit 4: Options Strategies
Trading Applications- Basic option strategies
- Advanced spread strategies
- Volatility trading strategies
- Risk management with options
Unit 5: Swaps and Structured Products
Complex Instruments- Interest rate swap pricing
- Currency swap structures
- Credit default swaps
- Structured note design
Unit 6: Risk Management
Greek Letters- Delta, gamma, and vega analysis
- Portfolio Greek management
- Value at risk calculations
- Stress testing scenarios
Unit 7: Advanced Topics
Contemporary Issues- Derivatives regulation developments
- Counterparty risk management
- Clearing and collateral requirements
- Emerging market derivatives
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