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Derivatives

Hey everyone!

I did start derivatives yesterday and Oh boy, it’s killing me. its my last topic area but I did find it very hard to grasp the concepts. quants and derivatives are my weakness. I am good at all other topic areas.

please let me know what to do.

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Hi, be familiar with the difference between price and value, that’s a basic must. Then there is a lot related on how you can calculate the value of a derivative (equity, swap, fixed income, currency) on a point in time. IFT videos are good explanation on this topic IMO 

Wish you the best 

Valuing derivatives at a point in time is, frankly, pretty simple:

PV(What you will receive) − PV(what you will pay)

This works for forwards, futures, swaps, FRAs, and options, though for options they already do the calculation for you and call it the premium.

Simplify the complicated side; don't complify the simplicated side.

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Keep practicing. What helped me with derivatives is the idea that these problems are, in the end, all about calculations. There are no tricks. If you practice enough, you should be able to get 100% on this section. That said, it wasn’t easy to learn.

S2000magician wrote:

Valuing derivatives at a point in time is, frankly, pretty simple:

PV(What you will receive) − PV(what you will pay)

This works for forwards, futures, swaps, FRAs, and options, though for options they already do the calculation for you and call it the premium.

This is straight forward explanation - just need to keep practicing.

TY