Derivatives: Futures, Options, CFDs and Certificates
Learn how futures, options, CFDs and German retail certificates work, how they are priced and margined, and how to measure their risks before you decide whether to use them at all.
Self-study course Self-study course: written lessons, videos and downloadable materials for independent learning. There is no supervision, assessment, individual feedback or tutoring. Self-check quizzes are evaluated automatically in your browser — we do not see your results.
All 13 lessons free
Before you start
- Comfort with percentages and basic algebra
- Know how orders, leverage and margin work (covered in the Trading and Risk Management courses)
- Understand the difference between investing and trading
What you will be able to do
- Explain the difference between hedging and speculation and identify which one a derivative trade serves
- Calculate daily variation margin, margin calls and total profit or loss for a futures position
- Calculate the intrinsic value, time value, break-even and maximum loss of call and put positions
- Read the four basic option payoff profiles and use delta, gamma, theta and vega to estimate price changes
- Compare CFDs, warrants, knock-out certificates and exchange-traded contracts by cost, counterparty risk and retail protections
- Apply a written decision framework and risk checklist before using any derivative
Lessons in this course
What derivatives are and why they exist: hedging versus speculation
Understand what a derivative is, the main contract families, and how the same contract can reduce risk for one party and create risk for another.
Forwards and futures: contract specifications, initial margin and daily settlement
Read a futures contract specification and calculate initial margin, daily variation margin and margin calls step by step.
Futures expiry and rollover: contango and backwardation
Calculate a futures fair value with the cost-of-carry idea and measure the cost or gain of rolling a position in contango and backwardation.
Options basics: calls, puts, strike, expiry and premium
Learn the rights and obligations of option buyers and sellers and calculate the result of simple call and put positions at expiry.
Option value: intrinsic value, time value and implied volatility
Split an option premium into intrinsic and time value, understand what drives time value and use implied volatility to estimate an expected price range.
Payoff diagrams: long and short calls and puts at expiry
Build payoff tables for the four basic option positions and read maximum profit, maximum loss and break-even from them.
The Greeks simply explained: delta, gamma, theta and vega
Use delta, gamma, theta and vega to estimate how an option price and a whole position change when price, time and volatility move.
Basic option strategies: covered call, protective put and vertical spreads
Combine shares and options into four standard strategies and calculate their maximum profit, maximum loss and break-even at expiry.
CFDs in depth: financing costs, ESMA retail rules and negative balance protection
Calculate the real holding cost of a CFD position and understand how the EU and German retail protection rules work in practice.
German retail products: warrants (Optionsscheine) and knock-out certificates
Understand how warrants and knock-out certificates are priced, calculate ratio, premium, leverage and knock-out levels, and see the risks specific to these issuer products.
Exchange-traded versus OTC: counterparty and issuer risk
Compare exchange-traded and over-the-counter derivatives and assess who you are exposed to if something goes wrong.
Derivatives and taxes in Germany: general orientation
Get a general overview of how private gains and losses from options, futures, CFDs and certificates are taxed in Germany and how loss offsetting works.
Should you use derivatives at all? A decision framework and risk checklist
Use a step-by-step framework to decide whether a derivative is the right tool, and size it so that a worst case stays acceptable.
Personal Finance & Money Management
Once you understand how derivatives can magnify both gains and losses, continue with the course "Personal Finance & Money Management" to make sure your budget, emergency fund and long-term plan are solid before you put any risk capital to work.
View course outline