Course Title: Futures and Options - Instruments and Markets

Part A: Course Overview

Course Title: Futures and Options - Instruments and Markets

Credit Points: 12

Course Code




Learning Mode

Teaching Period(s)


City Campus


625H Economics, Finance & Marketing


Sem 2 2006,
Sem 2 2007,
Sem 2 2008,
Sem 2 2009,
Sem 2 2010,
Sem 2 2011,
Sem 2 2012


Singapore Inst of Management


625H Economics, Finance & Marketing


Offsh 1 09,
Offsh 1 10,
Offsh 1 11,
Offsh 3 09,
Offsh 3 10,
Offsh 3 11

Course Coordinator: Stuart Thomas

Course Coordinator Phone: +61 3 9925 5773

Course Coordinator

Pre-requisite Courses and Assumed Knowledge and Capabilities

BAFI1008 (004969) - Business Finance 1

Course Description

This course is intended to familiarise you with the concepts of derivative securities, their nature, how they are priced, and how they are used.
Derivative securities are so called because they are derived from an underlying asset. The most familiar derivative securities are futures and options (call and put). In recent years there has been an explosion of applications of derivative securities in portfolios. The concepts of derivatives is becoming more important to understand these applications,
There are several advantages of using derivative securities, for instance transaction costs in derivative markets are usually less that those prevailing in cash markets. The volume of trading in derivatives often exceeds the volume of trading in the underlying asset. Derivatives are used for hedging, speculation, and managing risk profiles. It is now difficult to imagine how modern financial and commodities markets could function without the availability of efficient, liquid, derivatives markets.

Objectives/Learning Outcomes/Capability Development

This course will help you to develop your ability to:
Distil, scope and critically analyse problems
Use the technical tools and language of the field.
Recognise the uncertainty of business decision-making
Approach problems with intellectual openness and curiosity
Communicate and collaborate effectively

The overall objective of this subject is to develop an understanding of the concepts of derivative instruments, especially options, futures and forward; and understand the process to apply the concepts within financial market.
To achieve this objective, at the conclusion of this subject, you should:
1. Understand the principles underlying the analysis, pricing and uses of derivative instruments, especially the concepts behind futures and options.
2. Demonstrate competency in the use of language and terminology appropriate to derivatives markets.
3. Demonstrate an understanding of various derivatives pricing and analysis techniques.
4. Demonstrate an understanding of the applications of derivatives by industry practitioners.


Overview of Learning Activities

The course will be delivered in a series of face-to-face lectures that discuss separate topic using lecture notes and power point presentation. Material covered will be based on prescribed textbooks. A set of tutorial questions and sample problems are given on each topic.
An active participation in class discussion is expected. Another method of communication will be through the Blackboard via myRMIT.

Overview of Learning Resources

Course materials will be provided through the Blackboard via myRMIT, including lecture notes, presentation materials and access to RMIT Library online and hardcopy resources.

Overview of Assessment

There will be assessments in the form of mid-semester tests on parts of the material, before final examination.