2020 derivatives strategies removal

I feel like we haven’t talked about this much…

Derivative strategies for 2020 is completely removed. That includes:

  • Interest rate swaps/futures
  • Currency swap/futures
  • Equity swap/futures
  • Synthetic long/short asset/put/call/currency
  • Covered calls, protective puts, collars
  • Spreads, straddles, strangles
  • Breakeven prices and strategies

On the one hand, I knew most of this stuff and while it could be tricky it wasn’t close to the hardest stuff on the overall test, but on the other hand I’m not upset about all this being removed either.


What part of derivatives remains from 2019? Last year there was three readings:

Reading 39 - Pricing and Valuation Forward Commitments

Reading 40 - Valuation of Contingent Claims

Reading 41 - Derivatives Strategies

Thank you,


I believe they are going to include them in Level 3 material.

Is this just a hunch?

It is for sure. The Level III errata is out and it includes derivatives strategies in it since it’s mostly a portfolio management (biggest part of LIII) subject.

For those who wants to get a quick run through the 2020 syllabus for Level 2:


It does make more sense for that topic to be on level 3.

Derivatives strategies were pushed to level 3. Glad I put in the efforts to get the concepts right in level 2, they were one of my favourite chapters.

I haven’t focused too much on this but so far, derivatives has been 1) technicality&valuation on L2 2) strategies on L3. If they’re going to push everything to L3, I feel like it’s going to be a shitshow. To understand a strategy, you need to understand the pricing/ technical stuff that leads to it.

And the reason for employing it.

Wonder if this will bring down the L3 pass rate then…3 x exams in low- to mid-40 pass rates

Thank you

you are hunch

couldnt have they removed them when i took l2 :grin:

really hope theyre not in l3 material !

They are

Derivative strategies are simple geometry. Here is how: https://www.youtube.com/watch?v=eC2yo0Xn_bg

It was one of the best readings so far.

Derivative strategies are fun!

And easy, as it turns out.