Introduction to Derivatives - Part 1 (2018)

Introduction to Derivatives - Part 1 (2018)


This eCourse consists of three modules. Module 1 focuses on the basic types of derivatives – forward-type instruments (forwards, futures, and swaps) and options. The key differences between these instruments are described, along with the basics of their pricing. The module also discusses some of the risks that arise from the use of derivatives in general, particularly in light of global financial crisis and other events in recent times.

Module 2 covers the most basic derivative building block – the forward transaction – which can take the form of OTC forwards or and exchange-traded futures contracts. The similarities and the differences between these two product types are examined. It explains how it is becoming increasingly difficult to distinguish between the two. Finally the trends in the markets for both of these derivatives are discussed.

Module 3 looks at Contracts for difference (CFDs), a kind of derivatives that has seen an increased participation by hedge funds among others, and how CFDs can be used to take a leveraged positon on an underlying security. Finally, this module describes the advantages and disadvantages of CFDs.


On completion of this course, you will be able to:
- List the broad categories of derivatives
- Recognize how derivatives pricing is based on the idea that relative prices should be "arbitrage-free" Recall why there is considerable apprehension regarding the risks specific to derivatives
- Describe the key differences and similarities between forwards and futures
- Explain the different risks associated with forwards and futures
- Discuss the ongoing changes in forward and futures markets
- Recognize how a CFD works
- Identify the underlying securities used for CFDs
- Illustrate how a CFD can be used to take a leveraged position
- List the various advantages and disadvantages of CFDs


Module 1: Derivatives - An Introduction
Topic 1: Derivatives Basics
Topic 2: Derivatives Risks

Module 2: Forwards & Futures - An Introduction
Topic 1: Similarities between Forwards & Futures
Topic 2: Differences between Forwards & Futures
Topic 3: Risks in the Forwards & Futures Markets
Topic 4: Trading Mechanisms & Regulations

Module 3: Contracts for Difference (CFDs)
Topic 1: Overview of CFDs
Topic 2: Trading CFDs
Topic 3: Benefits & Downsides to CFDs


SFC:2.5, PWMA:2.5
All Member: HK$650
Staff of Corporate Member: HK$650
Non-Member: HK$925