OK, so given that derivatives is only 5-15% of the exam and (to me) is by far the most difficult, Im not sure spending 3- hrs trying to learn (then study) every bit of material is worth the time. Im going through the book for the first time (Schweser) and I think Im going to leave it to the end to study IF I have the time. Anyone else struggle with Derivatives? Thoughts?
Same here Im struggling with it. Try taking a break from the material and get back. I switched to ethics so I can let my brain relax from put-call parity and binomial calculations and many other materials that I have already forgotten.
BRUTAL
I hate it, I hate it, I hate it!!! I get to the concept checkers and can’t remember 1 thing that calls for calc’s. Wow, this is going to suck…
Derivatives aren’t easy, but they aren’t the most difficult neither. In my case, besides swaption valuation, I found the rest of the section are fair game on the exam.
Did anyone just call me?
swaptiongamma , i thought u are done with the studying for today…what are u still doing on this forum ? i just started …btw…when is gamma the greatest and why, swaptiongamma?
C’mon that’s an easy one 
… to see me emitt gamma radiations ask me FSA. Becase gamma measures the change in delta as the underlier changes, it’s some kind of a 2nd order derivative (ahh … well not go into too much technicalities) Just remember that delta gets very volatile when the option is very close to expiration and the option is at the money. So call delta or put delta is max at-the-money and close-to-expiration. For deep-in or deep-out of money calls/puts the gamma is ~0 since you know the outcome already and there is little to no delta fluctuation for changes in the price of the underlier.
agree, derivatives suck, if there is one area I am dreading and slacking on that is gonna be it for sure.
me too. I really gamed Level I on derivatives, I mean you knew there were going to be what, 6 Qs each session? So I just made sure I knew the really high level stuff figuring that would cover half of it (must have worked as I got 50-70) and didn’t worry too much about the more compicated concepts figuring I could spend all day and still not get it. But, given that it could go to 15% of Lvl II coupled with the fact that the world seems to be trending towards derivatives… I am really dreading getting to those readings.
i havent started studying for level 2 yet since I’m taking it june 2010 but having been exposed to a lot of the derivatives material via actuarial exams: an easy way for those more math oriented for understanding what “the greeks” measure is to take the partial derivative of the put-call parity equation with respect to whatever variable it corresponds to. for example, theta is time, delta is interest, gamma is second derivative since it is the change in delta… etc.
Yes, I took the calculus approach to remember those Greek symbols in derivative section. It actually makes a lot of sense when you think of Delta as first derivative, Gamma as second derivative, etc. That’s why I think Derivatives aren’t easy, but it’s actually doable and fair game. Only hard part I found is swaption valuation.
I’m totally overshooting the amount of time ihad assigned to study derivatives…retaining this is goin to be the challenge…any ideas on retaining this stuff?
hmmm… so ya boys did partial differentiation, double/triple integration too.
Regarding gamma: Gamma is the greatest when an option is ATM.
swaptiongamma Wrote: ------------------------------------------------------- > hmmm… so ya boys did partial differentiation, > double/triple integration too. boys and girls* ahem.
nice!
@ swaptiongamma >>hmmm… so ya boys did partial differentiation, double/triple integration too. What are u talking about? Am i reading the right books?!
IheartMath Wrote: ------------------------------------------------------- > swaptiongamma Wrote: > -------------------------------------------------- > ----- > > hmmm… so ya boys did partial differentiation, > > double/triple integration too. > > > boys and girls* > > ahem. careful with advertising you are a girl here, do a search on KarenC and akanska, lol
ill keep that in mind… lol this forum really does seem 95% male though, kind of surprising that it is noticeably skewed.