Basic financial instruments. The distribution of the rate of return of stocks. Random walk model of stock prices, ideas of L. Bachelier and B. Mandelbrot, Brownian motion. Historical data, normal and log-normal distributions. Black-Scholes formula, its modifications.
Trading strategies involving options, straddles, strangles, spreads etc.
Trading and hedging of derivatives. Hedging of other greeks. Elementary derivation of Black-Scholes formula, arbitrage, risk neutralvaluation, binomial models, modifications of binomial models. Exotic options, Asians, Barrier options, Binary options. Fixed Income Market Overview.