John C.Hull – Fundamentals of Futures & Options Markets (4th Ed.)

The introduction to futures and options markets is ideal for those with limited background in mathematics. The text is based on Hull’s Options, Futures and Other Derivatives, one of the best-selling books on Wall Street and in the college market.

Business, economics, and other faculties offer undergraduate and graduate courses. The book is useful for many practitioners who want to acquire a working knowledge of futures and options markets.

I was persuaded to write this book by my colleagues. There are options, futures, and other derivatives. The material was too advanced for their students. The markets of futures and options. (previously) There is an introduction to futures and options markets. Some of the same ground is covered. There are options, futures, and other derivatives. Readers who have had limited training in mathematics will find it easier to understand. There is no calculus in this book, which is an important difference from my other book.

There are a number of ways in which the text can be used. Instructors who like to focus on one- and two-step binomial trees may want to cover only the first 10 chapters. Chapter 6 can be omitted by instructors if they feel swaps are adequately covered by other courses. Chapters 11 to 21 can be used in many different ways. The material in Chapters 14, 16, 17, or 18 can be skipped by instructors if they feel it is too specialized. Instructors can choose to devote more time to futures and swaps markets, or to structure their course around options markets. The three new Chapters do not use a lot of mathematics. When used in the last two to three weeks of a course, they work well.

Chapter 1 introduces futures and options markets and outlines the different ways in which they can be used. Chapter 2 explains how futures and forward contracts work. Chapter 3 shows how forward and futures prices can be determined in a variety of different situations. Chapter 4 talks about futures contracts being used for hedging. Chapter 5 deals with interest rate markets. Chapter 6 deals with swaps. Chapter 7 explains how options markets work. If there are no arbitrage opportunities, Chapter 8 develops some relationships that must hold in options markets. There are a number of different trading strategies. Chapter 10 shows how options can be priced. The pricing of stock options is discussed in chapter 1. Chapter 11 covers options on stock indices and currencies. Chapter 13 gives ideas to futures options. Chapter 14 talks about smiles. Chapter 15 gives a detailed treatment of hedge parameters. Portfolio insurance is also discussed. Chapter 16 shows how to use the value-at-risk measure. Chapter 17 deals with the use of binomial trees to value American options. Chapter 18 deals with interest rate options. Chapter 19 deals with exotic options, mortgage-backed securities, and nonstandard swaps. Credit derivatives, weather derivatives, energy derivatives, and insurance derivatives are covered in Chapter 20. Chapter 21 reviews the lessons we can learn from derivatives disasters.

Students can use the quiz questions at the end of the chapter to test their knowledge of the key concepts. The answers are at the end of the book.