The course introduces both the theory and the application of derivatives markets and their uses in portfolio allocation and risk management. Several derivative assets will be provided for students, such as futures, forwards, swaps, and options. Other topics will also cover in this course: mechanics of future markets, hedging strategies using futures, interest rate futures, determination of forward and future prices, interest rate futures, mechanics of options markets, properties of stock options, trading strategies involving options, binomial trees, the black-scholes-merton model, employee stock options, interest rate options.