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UNIVERSITI TEKNOLOGI MARA
Course Name (English) FUTURES AND OPTIONS
Course Code FIN645
MQF Credit 4
Course Description This course examines the development of derivatives market in Malaysia, the mechanism for futures and options trading in Malaysia and the increasing role that it plays in the capital market. Specifically, the mechanics of hedging, speculating and arbitraging for Crude Palm Oil, Kuala Lumpur Composite Index and 3-month KLIBOR futures contracts will be covered in detailed. Strategies using stock index options and stock options are also emphasized in this course. The legal framework involved in this market will also be covered.
Transferable Skills Independent and Critical Thinker
Teaching Methodologies Lectures, Tutorial
CLO
CLO1 Associate the mechanics of hedging, speculating and arbitraging to the different derivatives contracts in order to make decision within its regulatory framework ( C4 )
CLO2 Differentiate the various type of derivatives contracts and their applications in the Malaysian capital market as to demonstrate lifelong learning skills. ( A3 )
CLO3 Display hands-on experience using software package(s) in Bloomberg and Bursa Station to help students to acquire the practical skills necessary to trade and solve business and finance problems pertaining to the futures and options market. ( P4 )
Pre-Requisite Courses No course recommendations
Topics
1. Overview of Financial Markets
1.1) Definition
1.2) Types
1.3) The Malaysian Market Structure
2. Concepts of Derivatives
2.1) History and Development
2.2) Definition and Purpose
2.3) Participants
3. Principles of Futures
3.1) Definition and Types
3.2) Physical Delivery vs. Cash Settlement
3.3) Principles of Hedging and Speculation
3.4) Trading Practicalities
4. Mechanics of Commodity Futures Trading
4.1) The Underlying Asset
4.2) CPO Futures Contract Features
4.3) Market Report
4.4) Hedging with CPO Futures
4.5) Speculating with CPO Futures
4.6) Spreading and Arbitraging with CPO Futures
5. Mechanics of Equity Futures Trading
5.1) The Underlying Asset
5.2) KLCI Futures Contract Features
5.3) Market Report
5.4) Hedging with KLCI Futures
5.5) Speculating with KLCI Futures
5.6) Spreading and Arbitraging with KLCI Futures
6. Mechanics of Interest Rate Futures Trading
6.1) The Underlying Asset
6.2) KLIBOR Futures Contract Features
6.3) Market Report
6.4) Hedging with KLIBOR Futures
6.5) Speculating with KLIBOR Futures
6.6) Spreading and Arbitraging with KLIBOR Futures
7. Mechanics of Bond Futures Trading
7.1) The Underlying Asset
7.2) MGS Futures Contract Features
7.3) Market Report
7.4) Hedging with MGS Futures
7.5) Speculating and Spreading with MGS Futures
8. Single- Stock Futures
8.1) The Underlying Asset
8.2) SSFs Contract Features
8.3) Advantages
8.4) Growth and Prospect
9. Principles of Options
9.1) Definition and Types
9.2) Basic Properties
9.3) Options Pricing
10. Basic Strategies of Options
10.1) Long Call
10.2) Short Call
10.3) Long Put
10.4) Short Put
10.5) Uses ans Implications
11. Synthetic Strategies of Options
11.1) Straddle
11.2) Strangle
11.3) Spread
11.4) Uses and Implications
12. Regulatory Framework of Derivative Trading
12.1) Aims of Regulations
12.2) The Finance Industry Act (FIA)
12.3) Roles of SC
12.4) BMDB (Exchange House)
12.5) BMDCH (Clearing House)
 
Assessment Breakdown%
Continuous Assessment60.00%
Final Assessment40.00%
Details of Continuous Assessment
Assessment Type Assessment Description % of Total Mark CLO
Assignment Individual 20% CLO3
Test Test 1 10% CLO1
Written Report Group Assignment 30% CLO2
Reading List
Recommended Text
  • Rosalan A, Noryati A and HO S.F 2009, Introduction to Malaysian Derivatives, 3rd Ed., UPENA UiTM Shah Alam
Article/Paper ListThis Course does not have any article/paper resources
Other References
  • Manuals SIDC 2011, Malaysian Futures and Options, SIDC, Securities Commission Kuala Lumpur