Pricing and Hedging Financial Derivatives: A Guide for Practitioners

Pricing and Hedging Financial Derivatives: A Guide for Practitioners attempts to explain the insights required in the pricing and hedging of the most common derivative products and aims to educate and inform the many rather than the few. Targeted at the practitioner rather than the academic, this book contains many worked examples to help develop an understanding of key concepts and tools.

The book begins with a descriptive examination of the main asset classes, the main derivative products and the most common option strategies. It then moves on to the fundamentals of option pricing, the Greeks, implied volatility, the volatility smile, exotic derivatives (digitals, barriers, Asian options) and multi-asset derivatives. Along the way, the authors spend time explaining the concepts of replication and risk-neutral valuation with numerous examples that help develop an intuitive grasp of derivative pricing. The book concludes with a chapter on structured products because these, unlike derivative products, may be accessible to investors.

A website accompanies the book (www.wiley.com/go/financialderivatives) and contains a number of practical example excel spreadsheets.

The book will provide investment professionals, whether new to the world of finance or seasoned, with the toolkit required to understand derivatives and approach them with confidence.