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FINC13-305: Options and Futures


The subject provides a thorough understanding of derivative securities (futures and options) and markets. The application of derivatives in the context of trading and hedging is discussed. In addition, the mathematical principles (stochastic calculus) of derivative pricing are introduced.

Subject details

FacultyBond Business School
Semesters offered
  • January 2018 [Standard Offering]
  • September 2018 [Standard Offering]
Study abroadAvailable to Study Abroad students
Study areas
  • Business and Commerce
Subject fees
  • Commencing in 2017: $4,205
  • Commencing in 2018: $4,247

Learning outcomes

1. Knowledge of the contractual features and properties of various derivatives, including options, futures and forwards
2. Determine the value of options, futures and forwards and calculate the payoffs and profits of strategies involving these products
3. Knowledge of the properties of the Wiener process and a recognition of its importance in finance
4. Ability to model standard prices processes using Ito's lemma, to state the SDEs of geometric Brownian motion and the Ornstein-Uhlenbeck process and to find their solutions.
5. Derive and apply the Black-Scholes-Merton formula
6. Understanding of the equivalent martingale measure (EMM), state pricing, and how they relate to the PDE approach to derivatives valuation.
7. Understanding of the principles of modelling the term-structure of interest rates and the ability to apply simple models
8. Demonstrate a general understanding of credit risk and credit risk models


Students must have successfully completed FINC13-303 Portfolio Analysis and Investment Markets and FINC12-200 Fundamentals of Finance or equivalent prior to undertaking FINC13-305

Subject outlines

Subject dates

Enrolment opens13/11/2016
Semester start16/01/2017
Subject start16/01/2017
Cancellation 1?30/01/2017
Cancellation 2?06/02/2017
Last enrolment29/01/2017
Last withdrawal?10/02/2017
Teaching census?10/02/2017
Enrolment opens16/07/2017
Semester start11/09/2017
Subject start11/09/2017
Cancellation 1?25/09/2017
Cancellation 2?02/10/2017
Last enrolment24/09/2017
Last withdrawal?06/10/2017
Teaching census?06/10/2017
Standard Offering
Enrolment opens12/11/2017
Semester start15/01/2018
Subject start15/01/2018
Cancellation 1?29/01/2018
Cancellation 2?05/02/2018
Last enrolment28/01/2018
Last withdrawal?09/02/2018
Teaching census?09/02/2018