Financial Derivatives: The Use and Pricing of Options and Futures
Professor Edward Szado
Financial derivatives are the cornerstone of risk management in financial institutions and corporate America. This discussion provides a brief overview of options and futures. I discuss their use in risk management, the impact of non-linear payoffs and their relative advantages and disadvantages. In addition, I provide a brief overview of pricing options using models based on the Black Scholes Merton option pricing model as well as a discussion of the characteristics of options and their underlying securities that determine the value and risk exposure of the options.
Dr. Szado is an Assistant Professor of Finance at Providence College, and holds pro bono positions as the Director of Research at the Institute for Global Asset and Risk Management and the Director of Research at the Center for International Securities and Derivatives Markets. Ed earned a Ph.D. in Finance from the Isenberg School of Management, University of Massachusetts – Amherst, an MBA from Tulane University and a BComm from McMaster University. He has taught at Boston University, Clark University, Providence College and the University of Massachusetts – Amherst. He is a former options trader and has worked extensively on asset allocation and risk managed investment programs. He was a founding Editor of the Alternative Investment Analyst Review (AIAR) and currently a member of the editorial board of the Journal of Alternative Investments (JAI). He is a Chartered Financial Analyst and has consulted to the Options Industry Council, the Chicago Board Options Exchange, the Chartered Financial Analyst Institute, the Alternative Investment Analyst Association and the Commodity Futures Trading Commission.
He has published more than fifteen journal articles, and coauthored four books in the areas of derivatives, alternative investments, and risk management. His research has been featured in a wide variety of media, including: Barron’s, Bloomberg, Dow Jones Newswires, Futures Magazine, Hedge World, Market Watch, Pensions and Investments, Reuters, Smart Money, Swiss Derivatives Review, and the Wall Street Journal.
