An Introduction to Equity Derivatives: Theory and Practice, 2nd Edition

An Introduction to Equity Derivatives is the updated and expanded second edition of the popular Finance and Derivatives: Theory and Practice. Designed for new practitioners, investors and students, the content covers all of the fundamentals of quantitative finance clearly and concisely.

Each chapter of the book includes numerous illustrations and exercises accompanied by the relevant financial theory, covering key topics such as present value, arbitrage pricing, portfolio theory, derivatives pricing, delta-hedging and the Black-Scholes model. Each topic is introduced to the reader in a succinct and consistent style that makes the complex subject matter accessible for those who have no financial background.

This revised and extended edition includes a new foreword written by Professor Emanuel Derman, one of the most acclaimed research scientists in the field of quantitative finance, as well as two new chapters covering cutting-edge concepts, volatility trading and exotic products. The existing chapters have been reworked to include even more accessible content as well as additional examples and illustrations.

The chapters form a sequence of gradual difficulty, separated into three sections. Part one, Building Blocks, covers the fundamental concepts used in quantitative finance, interest rates, the time value of money, bonds and yields, portfolio valuation, risk and return and diversification. Part two, First Steps in Equity Derivatives relies on discrete time concepts and covers forward contracts, options and option strategies, the binomial model, the lognormal model, Monte-Carlo simulations and dynamic hedging. Finally, part three, Advanced Models and Techniques, goes one level higher into continuous time finance and covers models for asset prices, stochastic processes and calculus, the Black-Scholes model, volatility trading, exotic derivatives and advanced models.

Written by the internationally respected author team of Sébastien Bossu and Philippe Henrotte, An Introduction to Equity Derivatives is an excellent resource for finance professionals and investors looking to acquire an understanding of financial derivatives theory and practice.