Options and Warrants - Fundamentals

At the end of this course you will have a good understanding of options, having analysed:

• The historical background which led to their creation
• The advantages and disadvantages of the main markets (organised market, over the counter market) on which they are traded as well as the main underlying assets (equities, bonds, currencies, interest rates, commodities) on which they are based
• The constraints of EMIR (European Market Infrastructure Regulation) which imposes new requirements on the use of derivatives. (Reduction of risks related to Over The Counter derivatives and transparency)
• Their characteristics according to their source (European options, American options) as well as the meaning of their specific terminology (strike price, intrinsic value and time value, call/put at the money/in the money/out of the money)
• The various types of risk encountered (counterparty, liquidity, settlement/delivery, operational...)
• Risk profiles and "Pay-Off" diagrams specific to each of these options
• The characteristics of an option premium
• The various explicative variables affecting the price of an option
• The main strategies encountered and their financial applications
• The various uses (hedging, trading, arbitrage) to which they can be put
• Treatment of a special option represented by a warrant, including its operating principles and its various uses (brakes and motivation)

• Introduction to options
• Historical analysis and international development of the options markets
• Major types of markets encountered (organised and over the counter)
• Topography of the various underlying assets used
• Basic characteristics of option contracts
• Risk profiles encountered
• Factors determining the price of an option contract
• Principles for using options
  • Hedging
  • Trading
  • Arbitrage
• Warrants
  • Main issuers
  • Intrinsic characteristics of the product
  • Types of market places in which they are quoted
  • Notions of parity and size
  • Main uses of warrants in asset management
  • Sensitivity to risk
• Conclusion