This course explores the replication of financial derivatives from the standpoint of investment banks ("sell-side") and the application of derivatives from the standpoint of pension funds, insurers, hedge funds, mutual funds and private equity funds ("buy-side").

The course is structured into three components: 1. The first module analyses how trading and structuring desks at investment banks use vanilla options to create bespoke payouts for institutional investors, corporates, and retail investors. 2. The second module examines how the buy-side uses derivatives for: Hedging: e.g., protecting traditional balanced portfolios, managing currency risk; Outperforming benchmarks: currency and equity overlay; Expressing "macro" views on equity indices, rates, currencies, and commodities; Expressing "micro" views on sectors and single stocks; And addresses why investor preferences give rise to risk premia, and how derivatives can be structured to take advantage of persistent behavioural biases in the market. 3. The third module synthesizes the key learnings from 1. and 2. into case studies.