Mechanics of Derivatives

What is a derivative (option), how does it work, and what are the risks?


Concepts

• American Call and Put Options as explained by Sal Khan

• American Call and Put Options as explained by the Options Industry Council

• Call Payoff and Put Payoff Diagrams as explained by Sal Khan

• The mechanics of Options Spreads as explained by The Options Guide

• The Butterfly Spread as explained by the Options Industry Council

• The Condor Spread as explained by the Options Industry Council

• Bid and Ask pricing as explained by Investopedia

• Probability and the Normal Distribution as explained by Sal Khan

• Historical and Implied Volatility explained at Options Playbook

• Delta, Gamma, Theta, Vega and Rho explained at Options Playbook

• Chicago Board Options Exchange (CBOE) Options Calculators

• Historical and Implied Volatility Calculator by the Options Industry Council

• The Black Scholes Equation as explained at MIT by Dr Gilbert Strang and Dr Vasily Strela

• Programming the Black Scholes Equation in MS Excel at eHOW

• Programming Monte Carlo Simulations in MS Excel at Microsoft

• Mathematica/Wolfram Demonstrations Project

• Statistical arbitrage as explained by Wikipedia

• TEDxNewWallStreet - Sean Gourley -High frequency trading and the new algorithmic ecosystem on YouTube