Option Pricing – Learning Roadmap

A derivative product is a financial instrument whose value is determined completely by external variables. The external factor, or the underlying, could be anything but in general, is either a financial asset or an economic variable (such as interest rates).

Derivative instruments include forward and futures contracts, vanilla and exotic options, and swaps. These instruments may be priced or valued in a number of ways. Options, for example, may be valued using closed form solutions (like the Black-Scholes option pricing formula) or Monte Carlo Simulators or Binomial Trees.

What are the prerequisites?

Key concepts and terminology associated with Derivatives

As a first step in learning about Derivatives Pricing, we begin by familiarizing ourselves with the related terminology. The following courses will help you grasp and get comfortable with the key concepts behind the derivatives language.

What topics are covered?

Calculation tools for pricing derivatives

We start off by developing a better understanding of the Black Scholes equation before moving to pricing with Binomial trees and Monte Carlo Simulation. Pricing means determining the present value of the expected value of the instrument on the valuation date. For this purpose, therefore, we also review interest rate modeling. These topics are covered in the following courses:

Derivative instruments I will learn to price

We then move on to pricing specific derivative instruments:

Premium Content:

PDF & EXCELOnline Courses
  1. Derivatives Terminology Crash Course
  2. Derivatives Pricing – Package
  3. Derivative Products
  4. Derivative Products – Package
  5. Derivative Pricing – Binomial Trees EXCEL Example
  6. Derivative Pricing – Binomial Trees – Efficient Approach
  7. Forward Prices, Forward Rates and Forward Rate Agreements (FRA) – EXCEL Example
  8. Forward Prices, Spot Rates & Forward Rates, Yield-to-Maturity, Forward Rate Agreements (FRA), Forward Contracts and Forward Exchange Rates
  9. Forward Prices and Forward Rates – Calculation reference & detailed examples
  10. Monte Carlo Simulation – Commodity – Example
  11. Monte Carlo Simulation – Currency – Example
  12. Monte Carlo Simulation – Equity – Example
  13. Monte Carlo Simulation – Package
  14. Monte Carlo Simulator with Historical Returns
  15. Pricing IRS – Module I – Term Structures
  16. Pricing IRS – Module I – Term Structures EXCEL Example
  17. Pricing IRS – Module II – IRS and CCS
  18. Pricing IRS – Module II – IRS and CCS EXCEL Example
  19. Pricing Interest Rate Options – Module III
  20. Pricing Interest Rate Options – Module III EXCEL Example
  21. Pricing Ladder Options using a Monte Carlo Simulator
  22. Pricing Interest Rate Swaps and Interest Rate Options – Package
  23. Valuing Options – Black Scholes Example
  24. Valuing Options – Binomial Tree – Traditional Approach – EXCEL Example