DER 09 Products and strategies
The valuation and risk management tools developed in the previous sections can be applied to any asset class to design new products and derivative-trading strategy. All of the above ideas and techniques can be applied without identifying the specific nature of the asset underlying the derivatives contract. They are generic. In what lies below, we discuss how the ideas and techniques are applied to derivatives contracts written on specific assets.
DER 09.1 Products and strategies: Stock index futures
The valuation and risk management tools developed in the previous sections can be applied to any asset class to design new products and derivative-trading strategy.
DER 09.2 Products and strategies: Stock index options
Valuation models show how stock index options can be used to structure various types of index products such as protected equity notes and portfolio insurance.
DER 09.3 Products and strategies: Stock products
Futures and options on individual stocks are also traded on exchanges and in over-the-counter (OTC) markets, and lend themselves to various strategies such as capturing dividends and acquiring shareholder voting rights.
DER 09.4 Products and strategies: Volatility products
The most common OTC stock option contract category is executive stock options. Understanding how to value these contracts is critical in measuring the economic impact that they have on shareholder wealth.
DER 09.5 Products and strategies: Compensation contracts
The most common OTC stock option contract category is executive stock options. Understanding how to value these contracts is critical in measuring the economic impact that they have on shareholder wealth.