PrefaceAbout the BookNew to This EditionAbout the AuthorAcknowledgmentsChapter 1 Derivatives: Introduction and OverviewIntroduction1.1 What are Derivative Instruments?1.2 Common Derivative Instruments1.3 Evolution of Derivative Instruments1.4 OTC versus Exchange-Traded Derivatives1.5 The Main Players in Derivative Markets1.6 Commodity versus Financial Derivatives1.7 Types of Risks1.8 Overview of Global Trading in DerivativesSummaryChapter 2 Derivative Markets and TradingIntroduction2.1 Trading Methods2.2 The Role of a Derivatives Clearinghouse2.3 Derivatives Trading in Malaysia2.4 Hong Kong Exchanges and Clearing2.5 Derivatives in Singapore2.6 Derivatives in Thailand2.7 Relative Trading Performance of the Four Derivatives ExchangesSummaryChapter 3 Forward and Futures Markets: Pricing and AnalysisIntroduction3.1 Forward Contracts3.2 Futures Contracts3.3 Mechanics of Futures Trading3.4 Margining and Marking-to-Market3.5 Forwards, Futures: Zero-Sum Game3.6 Futures Markets -- The Main Players3.7 Determination of Futures Prices3.8 Issues in Futures Trading3.9 Types of OrdersSummaryAppendixChapter 4 Stock Index Futures Contracts: Analysis and ApplicationsIntroduction4.1 Why Use SIF Contracts?4.2 Index Construction and Types of Indexes4.3 FBM KLCI Futures, Contract Specifications4.4 SIF Trading -- The Main Players4.5 The Pricing of SIF Contracts4.6 Applications of SIF Contracts4.7 SIF in Thailand4.8 SIF Contracts and Portfolio Management4.9 Issues in SIF Pricing4.10 Issues in SIF Trading4.11 Growth and Trading Performance of the FBM KLCI and the SET 50 Index Futures Contracts4.12 Single Stock FuturesSummaryChapter 5 Interest Rate Futures Contracts and Currency Futures ContractsIntroduction5.1 Interest Rate Futures Contracts5.2 What Is Interest Rate Risk?5.3 Bond Pricing, Yields, and Interest Rate Risk5.4 The 3-Month KLIBOR Futures Contract5.5 Contract Specifications -- 3-Month KLIBOR and 3-Month BIBOR Futures5.6 Determining the Equilibrium Price: The Implied Forward Rate5.7 3-Month IRF: Applications5.8 Singapore Exchange's IRF Contract: The 10-Year Mini Japanese Government Bond Futures Contract5.9 Determinants of IRF Prices5.10 Contract Performance5.11 Currency Forward and Futures Contracts5.12 The HKEX's US$/CNH Currency Futures ContractSummaryAppendixChapter 6 Introduction to OptionsWhat Are Options?6.1 Calls and Puts6.2 Payoffs to Investing in Stocks versus Options6.3 Expectations and Option Positions6.4 Options: Uses and Applications6.5 Option MoneynessSummaryChapter 7 Equity, Equity Index, and Currency OptionsIntroduction7.1 Trading Option Contracts7.2 Option Premiums and Underlying Asset Price7.3 American-Style Options and Early Exercise7.4 Intermediation and Margining7.5 Option Classes and Series7.6 Malaysia's FBM KLCI Options: Contract Specifications7.7 Stock Options Traded on Hong Kong's HKEX7.8 Stock Index Options in Thailand -- The SET 50 Index Options7.9 Currency OptionsSummaryAppendixChapter 8 Option Strategies and PayoffsIntroduction8.1 Uncovered/Naked Positions8.2 Hedge Strategies8.3 Spread Strategies8.4 Combination Strategies8.5 Covered Call Strategy8.6 Butterfly, Condor, Ratio, and Box Spreads8.7 Summary of Strategies by Market OutlookSummaryChapter 9 Option PricingIntroduction9.1 Asset Valuation in Finance9.2 The Binomial Option Pricing Model9.3 The Black-Scholes Option Pricing Model9.4 Determinants of Option Prices9.5 Illustration of Price Dynamics -- Changing Call and Put Values9.6 Issues in Option Pricing9.7 Implied Volatility9.8 Valuing Equity Index Options9.9 Valuing Currency OptionsSummaryAppendix IAppendix IIChapter 10 Replication, Synthetics, and ArbitrageIntroduction10.1 Replication and Synthetics10.2 Put-Call Parity and Arbitrage10.3 Put-Call Parity, Conversion and Delta Neutral Trading10.4 Put-Call Parity -- Empirical EvidenceSummaryChapter 11 Options in Corporate Finance and Real OptionsIntroduction11.1 Levered Equity: An Options Approach11.2 A Rights Issue11.3 The Value of Underwriting a Securities Issue11.4 Securities with Option-Like Features11.5 Real Options and Capital Budgeting11.6 Exotic OptionsSummaryAppendixChapter 12 Interest Rate Swaps, Credit, and Other DerivativesIntroduction12.1 Interest Rate Swaps12.2 IRS -- Applications12.3 Pricing IRS12.4 Currency Swaps12.5 Nondeliverable Forward Contracts12.6 Forward Rate Agreement12.7 Credit Derivatives12.8 Credit Swaps12.9 Credit Options12.10 Credit-Linked Notes12.11 Contract for DifferenceSummaryChapter 13 Derivative Instruments and Islamic FinanceIntroduction13.1 Necessary Features for Islamic Financial Instruments13.2 Islamic Finance Instruments with Features of Derivative Instruments13.3 The Ba'i-Al-Urbun13.4 The Bai bil-Wafa and Bai bil-lstighlal Contracts13.5 The Islamic Profit Rate Swap13.6 Islamic Structured Products13.7 Sukuk with Embedded Options13.8 Shariah Views on the Trading of Currency and Shariah-Compliant Tools for Managing Currency Risk13.9 Islamic View of Current-Day Derivative Instruments13.10 The Need for HarmonizationSummaryAnswers to Select End-of-Chapter QuestionsReferences and Further ReadingFormulasIndex