Available in 2022
Course code



10 units


6000 level

Course handbook


A broad range of derivative products are examined with a primary focus on how to use these for the management of financial risks. The course introduces standard models of pricing forward, futures and options on diverse underlying assets. The course then explores hedging methods to conduct risk management for business operations, speculative trades, and issued financial instruments. After completing this course students will be familiar with derivatives valuation and their use in risk management.


Newcastle City Precinct

  • Trimester 2 - 2022

Learning outcomes

On successful completion of the course students will be able to:

1. Analyse and price diverse derivatives products to generate an optimal risk management strategy.

2. Demonstrate critical thinking, analytical and problem solving skills in the context of derivatives pricing and hedging practice.

3. Explain the binomial model and its extension in continuous time to the Black-Scholes model.

4. Demonstrate an understanding of pricing forwards, futures and options contracts


The content of this course may include:

  1. Operation of derivatives market.
  2. Risk and return characteristics of derivative securities.
  3. Pricing forward and future contracts.
  4. Mechanics of option trading.
  5. Option pricing with the Binomial and Black-Scholes models.
  6. Options on stock indices, futures and exotic options.
  7. Managing financial risk using derivative securities.
  8. Credit derivatives markets and instruments

Assumed knowledge

GSBS6140 Investment Analysis

Assessment items

In Term Test: In-Class test

Written Assignment: Written Assignment

Formal Examination: Formal Examination

Contact hours

Newcastle City Precinct


Face to Face On Campus 3 hour(s) per Week for Full Term

The University of Newcastle acknowledges the traditional custodians of the lands within our footprint areas: Awabakal, Darkinjung, Biripai, Worimi, Wonnarua, and Eora Nations. We also pay respect to the wisdom of our Elders past and present.