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FINANCIAL MARKET COURSES

Equity Derivatives - Types

The equity derivatives market has witnessed substantial growth in recent years, with increased participation by hedge funds, commodity traders and asset managers, as well as by conservative investors, who mainly trade listed derivatives. Hedge funds are the drivers of product innovation, with new instruments such as contracts for difference (CFDs), volatility futures, correlation options and dividend swaps being traded in the market.

 

In this course, you will learn about three different types of equity derivatives: contracts for difference (CFDs), equity index futures, and equity index options. The course explains their mechanics, uses, and benefits.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Identify the reasons for the strong growth of equity derivatives in recent years

    Describe the mechanics and uses of contracts for difference (CFDs)

    Describe the mechanics and uses of index futures

    Describe the mechanics and uses of index options

  • COURSE OUTLINE

    Topic 1: Market Overview

    Equity Derivatives – Market Overview

    Factors Affecting Growth of Equity Derivatives

    o Hedge Funds

    o Growth of Listed Equity Derivatives Market

    o Product Innovation

    o Legalisation

    o Investor Sophistication

    o Growth of the European Market

    Topic 2: Contracts for Difference (CFDs)

    What is a CFD?

    Margin Requirements

    CFD Long Position – AN Example

    CFD Short Position – An Example

    CFDs on Equity Indexes

    Stop and Limit Orders on CFDs

    Stop Loss – AN Example

    Advantages of CFDs

    Disadvantages of CFDs

    Users of CFDs

    Topic 3: Equity Index Options

    What is an Equity Indexed Option?

    Equity Index Options – Features

    Buying an Indexed Call Option – AN Example

    Buying an Index Put Option – An Example

    Combining Futures & Options

    Topic 4: Equity Index Futures

    What is an Equity Index Future?

    Popular Equity Index Futures

    Index Future – Buy & Sell

    Price of an Equity Index Future

    Stock Index Arbitrage

    Hedging Using Index Futures

    Benefits of Index Futures

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    75 Minutes

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