Browse Section 3: Investment Products

Chapter 10: Derivatives

In this section

  • 10.1 The Role of Derivatives
  • 10.2 Types of Underlying Assets
    • 10.2.1 Equity Derivatives
      An in-depth exploration of equity derivatives, focusing on stock options and futures, which are financial instruments leveraging individual stocks or stock indexes.
    • 10.2.2 Fixed-Income Derivatives
      An in-depth exploration of fixed-income derivatives, specifically bond futures and interest rate swaps, highlighting their mechanisms, uses, and significance in the financial markets.
    • 10.2.3 Commodity Derivatives
      An in-depth exploration of commodity derivatives, focusing on futures and options based on physical commodities such as oil, gold, and agricultural products.
    • 10.2.4 Foreign Exchange Derivatives
      An in-depth exploration of foreign exchange derivatives, including currency futures and options, and their applications in hedging and speculation.
    • 10.2.5 Other Underlying Assets
      Explore the dynamics of exotic derivatives and other unique underlying assets in the financial markets.
  • 10.3 The Users of Derivatives
    • 10.3.1 Institutional Investors
      An in-depth exploration of how institutional investors, such as pension funds, insurance companies, and asset managers, utilize derivatives as part of their risk management strategies.
    • 10.3.2 Corporations
      Explore how corporations utilize derivatives, particularly in foreign exchange and commodity hedging, as a tool for stabilizing operational costs and revenues.
    • 10.3.3 Individual Investors
      Exploration of how individual investors utilize derivatives to enhance their investment and portfolio strategies.
    • 10.3.4 Financial Intermediaries
      Explore the role of financial intermediaries in the derivatives market, focusing on market making and liquidity provision by banks and brokerages.
  • 10.4 Options
    • 10.4.1 Definition and Characteristics
      An in-depth exploration of options, including the fundamental distinctions between call and put options, as well as essential contract specifications such as strike price, expiration, and premiums.
    • 10.4.2 Option Strategies
      An in-depth exploration of basic and complex option strategies used to achieve various trading objectives in the securities market.
    • 10.4.3 Pricing Models
      Exploration of option pricing models with a focus on the Black-Scholes model and the factors influencing option pricing.
  • 10.5 Forwards and Futures
    • 10.5.1 Forwards
      Detailed exploration of forward contracts within financial markets, emphasizing their customized nature and potential counterparty risks.
    • 10.5.2 Futures
      An in-depth analysis of futures contracts, focusing on their standardization and trading on exchanges, along with an explanation of margin requirements.
    • 10.5.3 Hedging and Speculation with Futures
      Understanding the dual role of futures contracts as instruments for risk mitigation through hedging and opportunities for profit through market speculation in the Canadian securities market.
  • 10.6 Rights and Warrants
    • 10.6.1 Rights
      Understanding shareholder rights, the process of exercising them, and their impact on securities markets.
    • 10.6.2 Warrants
      Explore the concept of warrants as long-term options issued by companies, their investment opportunities, and their speculative nature.
    • 10.6.3 Differences Between Rights, Warrants, and Options
      An in-depth analysis of the structural and functional differences between rights, warrants, and options as derivative financial instruments.
Thursday, September 12, 2024