Asset Classes and Trading Products
IntermediatePremium7 sections · 48 lessons · 96 questionsLog in to track progress
A trading interview will assume you know what the instrument is before it asks anything interesting about it. This course is that assumed knowledge, for every asset class a graduate role is likely to touch, and it is the largest course here for that reason.
Equities first, from order types and corporate actions through short selling and valuation. Then commodities and the storage costs that shape their curves, FX and the interest rate differentials behind carry, and futures and forwards, where cost of carry, contango, hedge ratios and the cash-and-carry trade are worked in full. Fixed income covers duration and the yield curve. ETFs cover creation and redemption, net asset value, and the arbitrage that keeps price near basket, which is a real business at several of the firms you may be applying to. Options run from payoffs and parity through the binomial tree, Black-Scholes, the Greeks and the volatility surface.
Nineteen interactive simulators are spread through it. Basics of Quantitative Finance covers the pricing theory underneath and pairs well with this.
What Are Equities?Ownership claims on a company's residual value, and why that word residual explains almost everything about how they behave.Free previewPrimary vs Secondary MarketsWhere capital is raised versus where ownership changes hands, and why the second matters for the first.Free previewMarket Participants in Equity TradingWho is on the other side of your trade, and how informed each type is likely to be.Free previewOrder Types and ExecutionThe instructions you can give an exchange, and the ones that behave differently from how they sound.Liquidity, Bid-Ask Spread, and VolumeMeasuring how easily a stock trades, and why volume alone is a poor proxy for it.Stock Indices and Market CapitalizationHow indices are built, why the weighting scheme matters more than the constituent list, and the flow that index membership creates.Corporate Actions: Dividends, Buybacks, and SplitsEvents that mechanically change price or share count, and the dates a trader must never confuse.Short Selling and MarginBorrowing to sell and borrowing to buy, and the asymmetry that makes shorting genuinely more dangerous.Introduction to Equity ValuationMultiples and discounted cash flows, what each is really assuming, and why traders use valuation differently from investors.Role of Equities in a PortfolioWhy equities anchor long-horizon portfolios, and why the diversification they rely on weakens exactly when it is needed.
Introduction to CommoditiesPhysical goods traded as financial instruments, and the storage and delivery facts that make them behave unlike anything else.Spot vs Futures in CommoditiesThe link between today's price and a future delivery price, and why the arbitrage only works in one direction.Key Commodity Markets and InstrumentsThe major contracts, and the specification details that decide whether you understand what you are trading.
Introduction to FX MarketsThe largest market in the world, why it has no exchange, and what actually moves exchange rates.Spot vs Forward FX ContractsForward rates come from interest rates, not forecasts, and covered interest parity is why.Currency Pairs and Quoting ConventionsBase and quote, pips and lots, and the conventions that make FX questions a test of care rather than cleverness.Carry Trade and Interest Rate DifferentialsEarning the rate differential, why theory says it should not work, and the crash risk that explains why it does.
Introduction to Futures and ForwardsTwo ways to fix a price for later, and the daily settlement that makes them economically different.Futures Market MechanicsStandardisation, the clearing house, and the daily settlement cycle that keeps credit risk out of the market.Margin, Leverage, and Settlement in FuturesWhy futures margin is not a deposit, the leverage it creates, and how contracts finally settle.Pricing Futures and the Cost of Carry ModelA replication argument, not a forecast, and the frictions that turn the equality into a band.Futures Curve and Contango/BackwardationThe shape of the curve, what it says about inventories, and the roll yield that dominates long-term commodity returns.Hedging with FuturesComputing the number of contracts, and the basis risk that no hedge removes.Speculation and Arbitrage in Futures MarketsTaking a view versus taking a spread, and why calendar and inter-market trades are the practical middle ground.Forward Contracts and OTC CustomizationWhen a bespoke contract beats a liquid one, and how counterparty risk is managed once you give up clearing.
Introduction to Fixed Income ProductsLending rather than owning, the instruments this creates, and the two risks that price them all.Fixed Income Markets and ParticipantsA dealer market rather than an exchange, and the liability-driven investors whose flow dominates it.Fundamentals of Bond ValuationDiscounting known cash flows, and the assumption buried inside yield to maturity.Interest Rate Risk and Yield CurveDuration as the hedge ratio of fixed income, convexity as the correction, and what the curve's shape signals.Introduction to Fixed Income DerivativesSwaps, caps, floors and swaptions: separating interest rate exposure from the underlying borrowing.
Introduction to ETFsA fund that trades like a stock, and the arbitrage mechanism that makes that possible.Types and Structures of ETFsPhysical against synthetic, and the leveraged products whose daily reset makes them unsuitable for holding.ETF Creation and Redemption MechanismThe arbitrage that keeps price near value, and why the ETF share count is elastic.The Net Asset Value of an ETFWhat the fund is worth per share, why it is stale, and why the intraday estimate is what traders actually use.ETF HedgingUsing ETFs as hedging instruments, and the specific reasons to prefer or avoid them over futures.Important Factors That Affect an ETF priceWhat moves an ETF beyond its basket, and why the ETF's own trading volume is the least important input.ETF Pricing and How To Trade On Price InefficienciesThe ETF arbitrage as an actual business, including the costs and risks that decide whether a gap is worth trading.
Introduction to OptionsThe right without the obligation, the asymmetry that creates, and why an option is really a bet on volatility.Other Relevant DerivativesThe four building blocks, the linear versus non-linear divide, and what every derivative is really doing.Pay-Off Diagrams: Strategies for Option TradingCombining options into shapes, organised by what view each one actually expresses.The Binomial-Tree (Option-Pricing)Pricing by replication in discrete steps, and the insight that the real-world probability never appears.The Black Scholes Model and Implied VolatilityThe formula, how to read it, and why traders run it backwards to get the number they actually care about.Black Scholes Model Derivation EssentialsThe delta-hedging argument, why the drift vanishes, and what the PDE is really saying.Dividends and Its Effect on Option-PricingWhy dividends lower calls and raise puts, and the one case where early exercise is genuinely correct.Sensitivity GreeksThe five sensitivities, what each one means to a trader, and the gamma-theta relationship at the centre of options trading.Options HedgingDelta hedging in practice, and why the frequency of rebalancing is itself the decision.Second-Order Greeks and Trading ImplicationsVanna, volga and charm: how your first-order Greeks change, and why that matters for a real book.Volatility Smile and Surface DynamicsImplied volatility varies by strike and maturity, and the shape is information rather than error.
Keep reading Asset Classes and Trading Products
48 lessons in this course, and every other premium course, on one subscription.
- Every lesson in every course, with the worked examples and interactive simulators
- Graded questions on every lesson, with explanations for the wrong answers as well as the right one
- The trainers, timed assessments and brainteaser library that go with them