Mastering Derivatives Markets 3e: A step-by-step guide to the products, applications and risks, 3rd Edition

About

Features

• Written by a market professional for the professional market
• It offers a comprehensive overview of everything you need to know regarding the derivative process and its instruments.
• Covers options, swaps and futures across key classes of rates, currency, equity, commodity and credit.
• Also gives explanations into the more complex tools including credit derivatives.

Description

"The definitive passport to success in derivatives. Don't enter the market without it!"

Bill Hodgson, Business Development, DTCC

“As a trader I crave clarity. Mastering Derivatives Markets integrates tradable insights with a nuanced account of the mechanics of the trade. My suspicion is that if you lost money recently in a derivatives trade it was to a trader who reads Ms Taylor's books.”

Joseph M. Brooks, Independent FX Trader, Las Vegas, USA

“We run a number of courses on financial products and this book serves as excellent pre-course reading as well as an everyday reference handbook.”

Maricar Obieta, Senior Vice President, Capital Markets Learning & Development Manager, Corporate and Investment Bank, Europe, Middle East and Africa, Citigroup

“An essential read for anyone serious about understanding the impact of technology on the global derivatives market.”

Kevin Thorogood, Director of Investment Bank Solutions, Thunderhead Ltd

Mastering Derivatives Markets provides full up-to-the-minute explanations of the basic building blocks of options, swaps and futures across the key asset classes: rates, currency, equity, commodity and credit as well as the downstream processes essential to an understanding of today’s new exchange traded instruments.

Can you answer the following questions with confidence?

• Do you understand Credit Derivatives, CDOs and tranches?
• What happens after the deal is done?
• What is benchmarking?
• How does STP work in this market?
• What are electronic templates?
• How is technology evolving?
• How do the new accounting regulations like IAS 39 and FASB 133 work?
• How will MiFID affect what we do?

If you can, great. If not, you will find all the answers, and more besides, in this revised third edition of Mastering Derivatives Markets, which is the most widely read, easy to understand book on the general derivatives market. It is read by finance students and graduates, bankers, brokers, hedge fund managers and journalists as well as being mandatory reading in most IT, operations and technology departments.

Keep this book at your side for future reference and don't enter the derivatives market without it!

Sample Content

Table of Contents

Author’s acknowledgements
Publisher’s acknowledgements
Foreword
Contributors

 1. Background and development of the derivatives markets

• Introduction
• Definition and key features
• Uses of derivatives
• Range of derivatives
• Increasing use of the Central Counterparty Model (CCP)
• Risk and benchmarking
• Market volumes
• Users and uses of derivatives
• Straight Through Processing (STP)

2. Market fundamentals

• Introduction
• How banks generate income
• Three key assumptions
• Role and use of LIBOR
• Day counts
• Financial maths
• Calculating forward rates
• Marking to market
• Yield curves

Quiz

 3. Derivatives fundamentals

• Range of derivatives   
• What is a vanilla trade?
• Settlement
• Triggers
• Liquidity and credit risk
• Understanding the underlying
• Benchmarks
• Fair value
• Dealing with derivatives

 4. Basic option concepts

·        Introduction

·        Option pricing

·        Option mechanics

 5. Interest rate derivatives – single settlement instruments

·        Background and development

·        Single settlement interest rate derivatives

·        Financial futures contracts

·        Forward rate agreements (FRAs)

·        Interest rate options (IROs)

·        Premium determinants

Quiz

 6. Interest rate derivatives

·         Introduction

·         Interest rate caps and floors

·         Interest rate collars

·         Interest rate swaps

Quiz

7. Benchmarking in the OTC derivatives markets
Penny Davenport

·         Financial benchmarking for derivatives

·         Operational risk measurements for derivatives

·         Markit Annual Scorecard

·         Conclusion

 8. Credit derivatives

·         Introduction

·         What is credit risk?

·         Style of trading

·         Default data

·         The first deals

·         Range of credit derivatives

·         Credit default swaps

·         Total return swaps

 9. Beyond a vanilla CDS
Robert Reoch

·         Introduction

·         Credit indices

Updates

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