Course Title: Options, Futures and Risk Management

Part A: Course Overview

Course Title: Options, Futures and Risk Management

Credit Points: 12.00

Course Code




Learning Mode

Teaching Period(s)


City Campus


625H Economics, Finance and Marketing


Sem 1 2006,
Sem 2 2006,
Sem 1 2007,
Sem 2 2007,
Sem 1 2008,
Sem 2 2008,
Sem 1 2009,
Sem 2 2009,
Sem 1 2011,
Sem 2 2011,
Sem 1 2012,
Sem 2 2012,
Sem 2 2013,
Sem 1 2014,
Sem 2 2014,
Sem 1 2015,
Sem 2 2015,
Sem 1 2016,
Sem 2 2016,
Sem 1 2017


Malaysia Institute of Managemt


625H Economics, Finance and Marketing


Offsh 1 09

Course Coordinator: Professor Malick Sy

Course Coordinator Phone: +61 3 9925 5895

Course Coordinator Email:

Pre-requisite Courses and Assumed Knowledge and Capabilities


Course Description

The course examines derivative contracts and their use in managing financial risk. It provides you with the knowledge and skills to assess major classes of derivative securities - options, futures and forward contracts, how they are constructed, how they work and how they are valued and priced. You will explore how options and futures can be used for hedging risk in the process of risk management and portfolio construction.

Objectives/Learning Outcomes/Capability Development


On successful completion of this course you will be able to:

CLO1: Explore the characteristics of derivative securities and determine how to apply these instruments to hedge the risk exposure of the business
CLO2: Use fundamental payoff concepts and the no-arbitrage principle to determine price and fair value for forward contracts and futures contracts
CLO3: Apply established market models including the BlackScholes-Merton models and Binomial models to determine fair prices for option contracts
CLO4: Analyse the derivative components of structured financial products and evaluate their role in modern portfolio management
CLO5: Design appropriate risk management strategies using options and futures for hedging and portfolio management

Overview of Learning Activities

In this course you will be encouraged to be an active learner. Your learning will be supported through various in-class and online activities comprising individual and group work. These may include quizzes; assignments; prescribed readings; sourcing, researching and analysing specific information; solving problems; conducting presentations; producing written work and collaborating with peers on set tasks or projects.

Overview of Learning Resources

Various learning resources are available online through myRMIT Studies\Blackboard. In addition to topic notes; assessment details and a study schedule you may also be provided with links to relevant online information; readings; audio and video clips and communication tools to facilitate collaboration with your peers and to share information.

Resources are also available online through RMIT Library databases and other facilities. If you require assistance with the RMIT library facilities contact the Business Liaison Librarian for your school. Contact details for Business Liaison Librarians are located online on the RMIT Library website.

Additional resources and/or sources to assist your learning will be identified by your course coordinator will be made available to you as required during the teaching period.

Overview of Assessment

The assessment alignment list below shows the assessment tasks against the learning outcomes they develop.

Assessment Task 1: 30%
Linked CLOs: 1, 2, 5

Assessment Task 2: 20%
Linked CLOs: 2, 3, 4

Final Examination: 50%
Linked CLOs: 1, 2, 3, 4

Feedback will be provided throughout the semester in class and/or in online forums through individual and group feedback on practical exercises and by individual consultation.