FINA 412: Options and Futures examines North American options and futures markets, emphasizing institutional structures, pricing principles, and real-world applications. Students will explore various types of futures and options contracts, such as those tied to stock indices, debt instruments, and foreign currencies. Emphasis is placed on using these instruments for risk management through hedging and for speculative strategies. The course also examines how financial derivatives impact equity and debt markets and addresses key regulatory issues affecting these instruments.

Students will develop a theoretical foundation in futures and options pricing, including the use of arbitrage pricing models, binomial trees, and the Black-Scholes-Merton model. Main topics to be covered include futures markets and central counterparties, the determination of forward and futures prices, interest rate futures, and swaps. Through detailed discussions of hedging, arbitrage, and speculative strategies, students will learn how to apply these tools effectively in financial markets, balancing theory with real-world application.

Prerequisite(s): FINA 380 or 385, and FINA 390 or 395.