Economics: Option Theory

Education facts

Code: NEKH82

<p>“You will learn how different derivative instruments—primarily options, futures and swaps - are priced and used for hedging and speculation. The course is based on probability theory and mathematical reasoning.</p><p>In this course we address two perspectives on derivatives: pricing and use.</p><p>You will gain an understanding of how derivatives, primarily options, are priced. Using arbitrage arguments, we derive the correct price of a derivative.</p><p>By learning how pricing works and which factors influence it, you will be able to interpret the characteristics of a derivative and how it affects a portfolio of assets. This in turn enables you, whether as an investor or working in a company’s finance department, to use different derivatives either for speculative purposes - for example, building a trading strategy based on expectations of a future share price - or for hedging purposes, such as protecting your company’s foreign sales when converted into Swedish kronor.</p><p>We study the following financial instruments in detail:</p><ul><li>Options: primarily European and American options, but also certain specialised options, known as exotic options</li><li>Forwards and Futures: both customised contracts (forwards) and standardised contracts (futures)</li><li>Swaps: various types of interest rate and currency instruments, including FRA (Forward Rate Agreement), IRS (Interest Rate Swap), and CCS (Cross Currency Swap)</li></ul>

Entry requirements

General and at least 20 ECTS basic economics, of which at least 7.5 ECTS basic microeconomics. In addition, a course in Econometrics/Quantitative Methods or 15 ECTS statistics or the equivalent is required.

Education offerings

Each offering has its own dates and conditions. Closed offerings are retained as history and do not mean that a new application is open.

• Economics: Option Theory

  Lund University

  Start date: 31 August 2026

  End date: 1 November 2026

  Pace of study: 50 %