| CODE | BKF4181 | |||||||||
| TITLE | Trading Futures and Options | |||||||||
| UM LEVEL | 04 - Years 4, 5 in Modular UG or PG Cert Course | |||||||||
| MQF LEVEL | 6 | |||||||||
| ECTS CREDITS | 4 | |||||||||
| DEPARTMENT | Banking and Finance | |||||||||
| DESCRIPTION | Content: 1. Introduction to trading - Trading as a business - Trading technologies, instruments, and venues - Factors influencing prices and the market microstructure - Overview of the Trading Challenge, order types, trading styles, trading plans, order entry, margin, and account management 2. Technical Analysis - Rationality behind technical analysis - Point and figure, candlestick, line and bar charts - Price and volume - Relative strength analysis - Trend analysis, support and resistance, and chart patterns - Technical indicators including priced-based, momentum oscillators, Sentiment, flow-of-funds, seasonal, calendar cycles, and Elliott Wave theory 3.Fundamental Analysis - Market specialists - Statistical analysis - Analogous seasonal relationships - Regression analysis - Index modelling 4. Foreign Exchange - Form and Function of the foreign exchange market - Difference between spot and forward rates - Determinants of the currency exchange rates - Foreign exchange risk - Exchange rate forecasting - Convertibility of currencies - Foreign exchange Spot Trading - Exchange rate movement - Cross Rates - Foreign exchange forwards - Forward points - Foreign exchange Swaps - Currency futures - Positive and negative carry 5. Futures - Brief history of futures markets - Users of Futures - Why trade futures - Key concepts - Futures specifications - Position limits - Margin - The clearinghouse - Price behaviour of contango vs backwardation - Physical and cash Settlement - Expiration - Basic trading strategies - Hedging - Trading currency, interest rate, equity, and commodity futures 6. Options - Revisiting the mechanics of option markets - Specifications, terminology and margin - Alternative financial options - Arbitrage based relationships - Put call parity - Option pricing - Quantifying volatility - Distribution of price changes - Option pricing models - Implied volatility - Volatility indices - Volatility smiles - Introduction to the greeks - Effect of price and time on delta, gamma, theta, and vega - Hedging the greeks - Forecasting and strategy selection - Simple and complex options strategies - Strategy and portfolio management - General principles of options trading 7. Psychology of Trading - Overconfidence - Prospect theory - Allais paradox - Regret theory - Cognitive dissonance - Wishful thinking bias - Attention anomalies - Anchoring - Mental compartments and accounting - Representativeness heuristic - Disjunction effect - Gambling behaviour - Magical thinking - Quasi-magical thinking - The Monty Hall problem - Dealing with ambiguity 8. Probability Theory - Kelly’s criterion - Shannon’s demon - Black Swans Reading List: Options as a Strategic Investment – Lawrence G. McMillan. Option Volatilty and Pricing: Advanced Trading Strategies and Techniques – Sheldon Natenburg. Fundamentals of Futures and Options Markets – John Hull. |
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| STUDY-UNIT TYPE | Lecture | |||||||||
| METHOD OF ASSESSMENT |
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| LECTURER/S | George Grech |
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The University makes every effort to ensure that the published Courses Plans, Programmes of Study and Study-Unit information are complete and up-to-date at the time of publication. The University reserves the right to make changes in case errors are detected after publication.
The availability of optional units may be subject to timetabling constraints. Units not attracting a sufficient number of registrations may be withdrawn without notice. It should be noted that all the information in the description above applies to study-units available during the academic year 2025/6. It may be subject to change in subsequent years. |
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