RS 303 · Level 300 · Advanced

Options and Derivatives

Name: RS 303 Options and Derivatives
Author: Elizabeta Dimoska

This course teaches how options, futures, forwards and swaps work, how they are priced and how they are used to hedge and to speculate. This free course by Elizabeta Dimoska runs to ten modules and about 20 study hours.

The Chicago Board of Trade Building at the end of LaSalle Street in Chicago

Photo: Ken Lund from Reno, Nevada, USA, CC BY-SA 2.0, via Wikimedia Commons (cropped).

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What you'll be able to do

Read an option chain.
Draw the payoff of any option position.
Apply put-call parity.
Price an option with the binomial model and interpret the Black-Scholes model.
Use the Greeks.
Construct the standard strategies.
Price a forward.
Explain how futures and swaps are used for hedging.

Risk noticeOptions and futures can lose value quickly and some positions can lose more than the amount invested. This course is education, not a recommendation to trade derivatives.

Before you startPrerequisite: RS 205 Statistics for Investors, Bonds & Fixed Income. Tools used: a spreadsheet, a live option chain from any broker or exchange site, the RiskStock paper trading account for the underlying shares.

How this course worksEach module has objectives, the lesson with worked examples, a practice mission using a real filing, a RiskStock tool or a spreadsheet, and a quiz. Pass a module quiz with 75% to mark it complete; quizzes can be retaken as often as you like. When the modules are done, complete the capstone and the 20-question final exam (pass mark 70%, one retake every 24 hours). Passing both unlocks a certificate of completion, and completing all nine university-level courses earns the Advanced Diploma. Everything is saved in your browser; no account is needed.

The syllabus

Ten modules and about 20 study hours in all: short, dense lessons (about 61 minutes of reading), then the worked problems, practice missions, quizzes and the capstone.

What derivatives are and why they exist Advanced

Define the four main derivative types and the three kinds of users.

~6 min read · ~2 hr with practice

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Option basics Advanced

Use option terminology correctly and split a premium into intrinsic and time value.

~5 min read · ~2 hr with practice

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Payoffs and profit at expiration Advanced

Calculate payoff, profit and break-even for the four basic positions.

~6 min read · ~2 hr with practice

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Put-call parity and price bounds Advanced

Apply put-call parity, identify an arbitrage and build synthetic positions.

~6 min read · ~2 hr with practice

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Pricing with the binomial model Advanced

Price a one-period option by replication and by risk-neutral probabilities.

~6 min read · ~2 hr with practice

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Black-Scholes and implied volatility Advanced

Identify the inputs of the Black-Scholes model, state how each affects option prices and interpret implied volatility.

~7 min read · ~2 hr with practice

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The Greeks Mastery

Define delta, gamma, theta, vega and rho and estimate how an option’s price will change.

~6 min read · ~2 hr with practice

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Option strategies Mastery

Construct the standard strategies and calculate each one’s maximum gain, maximum loss and break-even.

~6 min read · ~2 hr with practice

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Forwards, futures and swaps Mastery

Price a forward, explain futures margining, size a futures hedge and describe an interest rate swap.

~6 min read · ~2 hr with practice

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Risk, mechanics and tax Mastery

Recognize the practical risks of trading derivatives and the outline of their tax treatment.

~7 min read · ~2 hr with practice

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After the modulesThe capstone project → When you're readyFinal exam & certificate →

Your notes

Every note you take in a module collects here. They're stored only in this browser, so export them to keep them.

Common questions

Is RS 303 really free?

Yes. All ten modules, the quizzes, the capstone, the 20-question final exam and the certificate are free and need no sign-up. Your progress, scores and notes are saved privately in your own browser.

What should I know before starting?

The suggested prerequisite is RS 205 Statistics for Investors, Bonds & Fixed Income. This is a 300-level course and assumes those courses: the modules move quickly and use their terms without re-explaining them.

How long does it take?

About 20 study hours. The reading itself is short and dense, about 61 minutes; most of the time goes on the worked problems, the practice missions, the quizzes and the capstone.

Is the course for Canadian or US investors?

Both. Where rules, terms or tax treatment differ between Canada and the United States, the module says so and names both versions.

Is the certificate a professional qualification?

No. It is a certificate of completion from a free educational course. It is not a licence, an accreditation or a professional designation.

Who wrote this course?

It was written by Elizabeta Dimoska, founder and writer of RiskStock. RiskStock is educational and is not a registered dealer or adviser.

Keep learning

Educational content only — not investment, tax or legal advice. Companies, tickers and figures in this course are illustrative examples, not recommendations to buy or sell any security. Regulatory figures, limits and tax rules change; confirm current details with the regulator or tax authority. Worked examples are not forecasts. RiskStock is not a registered dealer or adviser, and its certificates are certificates of completion, not licences. Course written by Elizabeta Dimoska.