Basic financial instruments. The distribution of the rate of return of stocks. Random walk model of stock prices, ideas of L. Bachelier, 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, Time Value of Money, Risk Measures of a Bond.