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FINANCIAL MARKET COURSES

Equity Derivatives

Courses In This Course

The equity derivatives market is characterized factors such as the sheer diversity of instruments, the differences in underlyings, and geographic idiosyncrasies around the world. This course explains the basics of these derivatives and examines in detail some of the more popular structures, including convertibles, warrants, CFDs, and equity index swaps. Valuation and pricing methods for these instruments are also covered in this course.

Objectives

In this course, you will explore:

The main equity derivative instruments, including stock index options/futures, CFDs, and synthetic structures

The fundamentals of convertibles, including contingent convertibles (CoCos), and their valuation

The basics of warrants and the pricing of these instruments

The structure of equity index swaps, along with the associated cash flows and other related issues

Prerequisite Knowledge

A basic knowledge of capital markets is assumed.

Learner Profile

This course is designed for:

New recruits to banking and financial organizations

Trainee dealers and traders

Operations and support staff

Sales and marketing executives

Finance and accounting staff

IT staff

Compliance and regulatory staff

Personnel managers and recruitment staff

  •    EQUITY DERIVATIVES - AN INTRODUCTION

    Overview

    An equity derivative is a derivative whose underlying instrument is a stock or stock index. Hence, the value of an equity derivative is a function of the value of the stock or index. The market for equity derivatives continues to expand with new product structures constantly appearing. This course introduces the most important equity derivatives, including stock options, stock index futures and options, warrants and convertibles, structured and synthetic equity derivatives.

    Course Duration

    60 mins

    Prerequisite Knowledge

    Options – An Introduction

    Forwards & Futures – An Introduction

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  •    EQUITY DERIVATIVES - TYPES

    Overview

    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.

    Course Duration

    75 mins

    Prerequisite Knowledge

    Equity Derivatives – An Introduction

    Forwards & Futures – An Introduction

    Options – An Introduction

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  •    CONVERTIBLES - AN INTRODUCTION

    Overview

    Convertible bonds are interest-bearing securities that give the holder the option of surrendering (converting) the bond for a pre-determined amount of stock (usually the issuer's). Convertibles permit issuers to raise finance at a lower financing cost, yet offer investors a higher income than dividends on the underlying stock, as well as offering a conversion privilege.

     

    This course looks at the most common types of convertibles and the motivations for issuing and investing in them. The mathematics of convertibles and their special provisions are also presented.

    Course Duration

    90 mins

    Prerequisite Knowledge

    Bonds – An Introduction

    Bonds – Primary & Secondary Markets

    Equity Derivatives – An Introduction

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  •    CONVERTIBLES - INTRODUCTION TO

       CONVERTIBLE VALUATION

    Overview

    Convertible bonds are hybrid instruments with characteristics of both traditional bonds and equities. Valuation of convertibles reflects this dual nature. A convertible can be seen as a combination of a non-convertible bond and a call option. When this option is out of the money, the convertible trades (and is valued) as a non-convertible bond. When the option is deep in the money, the convertible will trade and be priced as the underlying stock. Pricing a convertible that is at the money is more complex and requires the use of sophisticated option pricing methods.

     

    This course outlines how convertibles are priced and also the factors that influence their prices.

    Course Duration

    60 mins

    Prerequisite Knowledge

    Convertibles – An Introduction

    Options – Introduction to Option Valuation

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  •    CONTINGENT CONVERTIBLES (COCOS)

    Overview

    A CoCo is a bond which is automatically converted into equity when a predefined trigger point is breached, typically if where the issuer’s tier one capital falls below a pre-set limit. Many regulators and banks see CoCos as valuable regulatory capital buffers in the event of the issuer financial distress.

     

    This course describes the key features of contingent convertibles and how these instruments are priced. The regulatory background and market development of CoCos are also outlined.

    Course Duration

    50 mins

    Prerequisite Knowledge

    Convertibles – An Introduction

    Basel III

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  •    WARRANTS - AN INTRODUCTION

    Overview

    From its humble beginnings in the 1980s, when the market developed out of the need for Japanese corporations with relatively poor credit ratings to raise cheap debt, the warrant market has continued to thrive up to the present day. It has changed beyond recognition and now represents an important source of funding for a variety of borrowers, in addition to being a highly lucrative investment market for many fund managers. The market is noted for its ability to develop new and innovative features, as it strives meet the requirements of diverse groups of investors around the world.

     

    In this course, you will learn about the different types of warrants. You'll also learn about how warrants compare with other similar types of securities.

    Course Duration

    90 mins

    Prerequisite Knowledge

    Equity Derivatives – An Introduction

    Options – An Introduction

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  •    WARRANTS - PRICING

    Overview

    The popularity of covered warrants has been a recent development within the warrants market. Simultaneously, the market for traditional warrants has declined in importance.

     

    A covered warrant enables an investor to buy or sell an underlying asset at a predetermined price. The underlying asset is usually a stock, but can also be a stock index, bond, commodity or other asset.

     

    This course will primarily focus upon covered warrant pricing. However, the pricing of traditional warrants will also be considered.

    Course Duration

    60 mins

    Prerequisite Knowledge

    Warrants – An Introduction

    Options – Introduction to Option Valuation

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  •    EQUITY DERIVATIVES - EQUITY INDEX SWAPS

    Overview

    An equity index swap is a contractual agreement between two parties to exchange cash flows or streams of payment, with one stream linked to the performance of an equity index and the other stream linked to an interest rate index. These swaps provide a way of synthetically investing in a stock market index and replicating cash investments in the underlying, resulting in a reduction in costs.

     

    This course discusses the structure of equity index swaps, along with the associated cash flows. It also describes the role of a swap dealer, the pricing of equity swaps and other related issues.

    Course Duration

    90 mins

    Prerequisite Knowledge

    Prior to studying this course, you should have a sound understanding of swaps and equity derivatives as outlined in the following courses:

     

    Swaps – An Introduction

    Equity Derivatives – An Introduction

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