Derivatives Markets: Advanced Modeling and Strategies from edX

Financial derivatives are ubiquitous in global capital markets, and those products and the institutions around them continue to evolve at a rapid pace. This course is part of the MicroMasters® Program in Finance, and is designed for students seeking to develop a sophisticated and durable understanding of valuation and hedging methods, and a basic familiarity with major markets and instruments. Tools for quantifying, hedging, and speculating on risk are emphasized.

Topics include forwards, futures and options in the stock, fixed income and commodity markets, exotic options, real options, interest rate and currency swaps, mortgages, credit risk, securitization, the yield curve, duration and convexity.

The knowledge and skills acquired are essential for any well-trained financial practitioner. They will be most useful for those planning a career in sales and trading, portfolio management, commercial banking, investment banking, insurance, as a hedge fund manager, or as an analyst or manager in a public sector financial institution, central bank, or financial regulatory agency. Corporate financial managers, as consumers of complex financial products and hedging instruments, will also benefit from this knowledge. The course is excellent preparation for anyone planning to take the CFA exams.

What's inside

Learning objectives

Advanced derivatives pricing approaches adaptable to valuing new products
The many ways to shape risk exposure with derivatives

Important facts about the world’s largest financial markets

Advanced derivatives pricing approaches adaptable to valuing new products
The many ways to shape risk exposure with derivatives
Important facts about the world’s largest financial markets

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Explores advanced derivatives pricing approaches adaptable to valuing new products

Teaches the many ways to shape risk exposure with derivatives

Imparts important facts about the world’s largest financial markets

Taught by Deborah J. Lucas and Egor Matveyev, who are recognized for their work in the world’s largest financial markets

Provides a solid foundation for careers within sales and trading, portfolio management, commercial banking, investment banking, insurance, hedge fund management, or as an analyst or manager in a public sector financial institution, central bank, or financial regulatory agency

Reviews summary

Derivatives: advanced, rigorous, career-focused

According to students, this course offers an exceptionally deep and rigorous understanding of derivatives markets. Many praise its advanced modeling and strategies, highlighting the clarity of the instructor's explanations even for complex topics. While frequently described as challenging and demanding, learners consistently find the experience highly rewarding, noting it provides a strong theoretical foundation and excellent preparation for roles in finance like quant analysis, risk management, and for CFA exams. Some mention a desire for more hands-on coding examples or immediate practical application, suggesting it leans more towards academic rigor, which is a neutral point depending on one's goals. Overall, it's considered indispensable for serious finance professionals.

Assignments reinforce learning despite being tough.

"The problem sets were tough but incredibly helpful for cementing my understanding."

"The assignments truly challenge you to apply the concepts taught in lectures."

"I found the problem sets challenging but they greatly reinforced my learning."

Excellent preparation for finance careers and CFA exams.

"It truly prepares you for real-world application in finance. I highly recommend it for anyone serious about quant finance or asset management."

"This course was great for my CFA preparation, solidifying many key concepts."

"I consider this course a must-take for anyone working in derivatives or risk management."

"I found this course prepared me well for advanced financial roles."

Provides a rigorous and unparalleled understanding of derivatives.

"This course exceeded my expectations. The depth of coverage on advanced derivatives pricing models was exceptional, far beyond what I've seen in other programs."

"Absolutely brilliant! The course material is incredibly well-structured... I particularly appreciated the modules on exotic options and interest rate swaps; they clarified many concepts I struggled with previously."

"This course is an indispensable asset for anyone serious about financial engineering or quantitative finance. The treatment of real options and securitization was particularly strong for me."

"I found the rigor of this derivatives course unparalleled. The professor explained concepts with incredible clarity, making complex topics accessible."

Strong in theory, but some desire more hands-on practical application.

"While the lectures were excellent, I sometimes wished for more hands-on coding examples or practical case studies to apply the theory."

"The content is undeniably high quality, but for me, the delivery felt very academic and less practical than I hoped, craving more real-world application."

"I feel this course provides a strong theoretical foundation. For real application in the industry, I know I'll need to supplement it with programming skills and recent market developments."

Requires a strong quantitative background and maintains a fast pace.

"The pace is intense, but the learning is immense."

"It definitely requires a strong background in calculus and linear algebra; I found it challenging without it."

"It's very dense and moves quickly, which can be overwhelming if you're not fully immersed, so be prepared."

"I struggled a lot with this course. While the material is advanced, I felt the prerequisites weren't fully emphasized, like jumping into the deep end without enough prior swimming lessons."

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in Derivatives Markets: Advanced Modeling and Strategies with these activities:

Seek guidance from a mentor

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Identify and connect with an expert in the field of derivatives to gain additional insights and guidance. Regular communication and support can enhance your learning journey.

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Identify potential mentors within your network or reach out to professionals in the industry.
Reach out to the mentor and request guidance, expressing your interest in derivatives.
Meet regularly with your mentor to discuss your progress and seek advice.

Participate in peer-led study groups

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Join or start study groups with other students to share knowledge, ask questions, and work through problems together. This fosters collaboration and improves comprehension.

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Find or create a study group with classmates.
Meet regularly to discuss course materials, solve problems, and prepare for assessments.
Contribute actively and actively seek support from group members.

Solve derivative pricing problems

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Engage in practice problems to sharpen your ability to price derivatives. Test your understanding of pricing models and apply them to real-world scenarios.

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Locate practice problems and solution sets online or in textbooks.
Attempt to solve the problems independently.
Review the solutions and identify areas for improvement.

Two other activities

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Compile a curated list of resources

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Gather and organize a comprehensive collection of resources related to derivatives, including articles, videos, books, and websites. Share it with your peers to foster a collaborative learning environment.

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Search and identify high-quality resources on derivatives.
Organize the resources into a structured format (e.g., annotated bibliography, website).
Share the compilation with classmates or online communities.

Contribute to open-source projects

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Engage with open-source projects related to derivatives to gain practical experience, contribute to the community, and deepen your understanding of the subject matter.

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Identify open-source projects focused on derivatives or financial modeling.
Contribute to the project by adding new features, fixing bugs, or improving documentation.
Collaborate with other project members to refine and enhance the project.

Career center

Learners who complete Derivatives Markets: Advanced Modeling and Strategies will develop knowledge and skills that may be useful to these careers:

Quantitative Analyst

Quantitative Analysts design and implement mathematical techniques to solve business problems for banks, hedge funds, insurance companies, and other financial institutions. Work is often analytical and involves the use of mathematical, statistical, and programming skills to assess risk, pricing models, analyze markets, and develop trading strategies. This course provides a strong knowledge of derivatives and advanced modeling techniques, which are essential skills for success in this role.

See salaries and explore the career path for Quantitative Analyst

Financial Analyst

Financial Analysts provide guidance to businesses and individuals on economic trends, investment opportunities, and financial planning. Most Financial Analysts work in banking, but they can also work in government, real estate, or non-profit organizations. This course will help build a foundation for advising clients on investment strategies and portfolio management.

See salaries and explore the career path for Financial Analyst

Financial Risk Manager

Financial Risk Managers are responsible for identifying and managing financial risks to ensure the stability of companies and organizations. This course will help build a foundation for developing and implementing risk management strategies, including the use of derivatives and other financial instruments.

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Hedge Fund Manager

Hedge Fund Managers make investment decisions for hedge funds, which are investment funds that use advanced investment strategies to generate high returns for investors. This course will provide an understanding of the securities, derivatives, and strategies used by Hedge Fund Managers.

See salaries and explore the career path for Hedge Fund Manager

Investment Banker

Investment Bankers provide financial advice to corporations and governments, which may include the use of derivatives for raising capital, managing risk, or making acquisitions. This course will help build a foundation for understanding and utilizing derivatives in these advisory roles.

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Portfolio Manager

Portfolio Managers make investment decisions for clients, including individuals, institutions, and pension funds. This course will provide an understanding of how derivatives are used to manage risk and enhance returns in investment portfolios.

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Securities Trader

Securities Traders buy and sell stocks, bonds, and other securities for clients or on their own account. This course will provide an understanding of the different types of derivatives and their uses in the trading industry.

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Credit Analyst

Credit Analysts assess the creditworthiness of individuals and companies, which is essential for making lending decisions. This course will provide an understanding of how derivatives are used in credit risk analysis.

See salaries and explore the career path for Credit Analyst

Insurance Underwriter

Insurance Underwriters assess risk and determine insurance premiums for individuals and businesses. This course will provide an understanding of how derivatives are used in the insurance industry to manage risk.

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Financial Engineer

Financial Engineers develop and implement financial products and strategies for banks, hedge funds, and other financial institutions. This course will provide an understanding of the mathematical and financial principles behind the development and use of derivatives.

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Actuary

Actuaries use mathematical and statistical methods to assess risk and solve financial problems for insurance companies, pension funds, and other businesses. This course will provide an understanding of how derivatives are used in the actuarial field.

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Compliance Officer

Compliance Officers ensure that financial institutions comply with relevant laws and regulations, including those governing the use of derivatives.

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Operations Manager

Operations Managers oversee the day-to-day operations of banks, hedge funds, and other financial institutions, which includes managing the use of derivatives.

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Risk Analyst

Risk Analysts assess and mitigate risk for businesses and organizations, which may include the use of derivatives.

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Management Consultant

Management Consultants advise businesses on how to improve their operations and performance, which may include the use of derivatives for risk management or financial planning.

See salaries and explore the career path for Management Consultant