Best way to attack Derivatives?

I am through all the material, except for Derivatives…I have yet to do any practice exams and I would like to gauge how much time and effort I will need to put into this topic in the most efficient way without focusing on minutia.

Any suggestions?

Two suggestions:

I second that ! I made post-it notes on my fridge out of them, awesome thanks sir !


Do a LOT of exercises as well. Understanding pricing and valuation is one thing, but being able to solve exercices is another daunting task.

^ Completely agree - no questioning this. Practice practice practice.

Yeah, I had a pretty rough session with swaps last night. I realized I didn’t have a clue what I was doing, not sure how I did well on the Schweser EOCs… but the CFA EOCs kicked my butt and I had to spend a few hours learning what the heck I was doing.

It needs to click, once it does, u’ll realize swaps/forwards/futures calculations aren’t that complicated. Most of the they give you all the tools you need, and it’s relatively straightforward.

full disclosure: I started derivatives yesterday and am continuing today. straight frim cfai text and should be finished the entire section by end of today (on black Merton Scholes right now). not sure if I’m missing something but I’m not seeing the difficulty thus far at all. pricing/valuing forwards and futures is very easy, and black Scholes Merton we are not required to calculate anything on exam, just know the relationships. so unless swaps/CDSs are just the hardest thing on the planet, I’m a little confused where all the negativity comes from. I studied for 10 hrs yesterday and will do another 10 today. there is a TON of optional reading in this section that I haven’t touched. what I’m saying is you can finish the section in 2 full days. I do plan on carrying out questions/practise in future but I’m not too concerned with this section after going through it.

from my experience with level one and even EOCs for this level, it seems the emphasis is always on knowing the concepts/relationships rather than knowing how to calculate something. I’m not saying the questions are useless bc indeed many of them are principle based… but I guess I’m finding personally that it’s more important to understand the concepts involved and how x affects y than knowing how to compute things. of course I’m not suggesting going into exam without knowing how to do calculations, just saying I’d advise spending more time on reading/revising of the fundamental relationships.

No offense, but your full disclosure contained all I really needed to know regarding the rest of your input. I don’t think being honest about struggling with a particular topic is being negative, just sharing that what I thought was something I knew turned out to be different when I did the CFAI EOCs. So yeah, derivatives might not seem too bad to you because you’re literally in the chapters as we speak. I was going through questions on material I haven’t looked at in a few weeks (at least).

Go into the swaps CFAI EOCs and tell me that calculations aren’t important. Obviously the exam questions will be way less labor intensive but yeah… I think I’ll be cautious and make sure I can calculate all the derivs.

^^ the man wanted to know how to attack and how difficult the material is. I’m just giving my take, ie. it’s really not that bad at all. you telling me about its difficulty when u haven’t touched it in weeks is telling me more about how fresh it is in your head, and not about the challenge of learning the material. I’m just telling dude to attack bc it can be handled in a couple days without much trouble. how u plan on keeping the material relevant in your head for future is to eachs own.

The CFAI material does an amazing job of helping you understand the calcs. Dont waste your time with schweser for this one. I found Derivs to be one of the fastest/easiest sections in the curriculum from the way the content is presented.

I tell you what, the day you start seeing Derivatives as the vegetables your mother forced you to eat - is the day you’ll stop fearing derivatives.

Just deal with it head on, eat it first