DERIVATIVES MARKETS - 2027/8

Module Overview

This module provides a structured introduction to financial and commodity derivatives markets, focusing on the pricing, risk management, and practical application of derivative securities. Instruments such as forwards, futures, options, and swaps are examined. The module adopts a lecture-led approach, where core theoretical concepts are introduced systematically and reinforced through guided examples and applied problem-solving. Students are progressively exposed to increasingly complex financial instruments and market practices, enabling them to develop both analytical rigour and professional awareness. Emphasis is placed on linking theory to real-world applications, including hedging decisions, trading strategies, and risk management practices within firms. The module also considers the broader implications of financial innovation, including lessons from past crises.

Module provider

Economics

Module Leader

MANDILARAS Alexandros (Economics)

Number of Credits: 15

ECTS Credits: 7.5

Framework: FHEQ Level 6

Module cap (Maximum number of students): N/A

Module Availability

Semester 1

Prerequisites / Co-requisites

None

Module content

The module covers financial and commodity futures and options, as well as collateralised debt obligations (CDOs) and swaps.

Assessment pattern

Alternative Assessment

The alternative assessment for the group options trading project is an individual assignment.

Assessment Strategy

The assessment strategy is designed to evaluate students' mastery of theoretical concepts, their ability to apply these concepts in practical contexts, and their development of professional and transferable skills.

The module combines:

1. An individual CFO report (30%), assessing the ability to analyse market conditions, apply hedging strategies, and produce a professional financial report
2. A group options trading project (30%), evaluating applied trading skills, strategy implementation, teamwork, and performance analysis
3. A final examination (40%), assessing problem-solving ability, theoretical understanding, and analytical reasoning under time constraints

The lecture-based structure ensures that students are systematically prepared for each assessment through progressively developed knowledge and guided practice.

Formative assessments (weekly self-tests and in-class activities) provide regular feedback and support continuous learning.

Students receive feedback through:

• Written feedback on the CFO Report and the Group Options Trading Project via SurreyLearn, including guidance for improvement
• In-class feedback during lectures and tutorials through discussion of key concepts and/or online polling
• Automated feedback from weekly formative self-tests

This combination ensures both timely and developmental feedback throughout the module.

Module aims

• Develop a systematic and rigorous understanding of financial and commodity derivatives markets and the securities traded within them
• Build students' analytical capabilities in pricing, hedging, and risk management of derivative instruments
• Strengthen students' ability to apply theoretical models to real-world financial decision-making
• Enhance employability by developing professional skills in financial analysis, reporting, and trading environments
• Foster confidence in solving quantitative problems under time constraints and communicating financial insights effectively

Learning outcomes

Methods of Teaching / Learning

The learning and teaching strategy is designed around a structured lecture format, supported by interactive elements to reinforce understanding and engagement.

Each week consists of:

• Lectures introducing core theoretical concepts, models, and frameworks in a clear and structured manner
• Interactive elements within lectures, including live polling, guided questions, and short problem-solving exercises to check understanding and promote engagement
• Worked examples, demonstrating the application of theory to realistic financial scenarios
• Tutorial sessions, where students practise solving quantitative problems and receive targeted support
• Directed independent learning, including reading, practice questions, and preparation for assessments

Formative self-tests with automated feedback are provided to support consolidation of learning and allow students to monitor their progress.

This approach ensures that students first acquire a solid conceptual foundation through lectures and then deepen their understanding through application and practice.

Indicated Lecture Hours (which may also include seminars, tutorials, workshops and other contact time) are approximate and may include in-class tests where one or more of these are an assessment on the module. In-class tests are scheduled/organised separately to taught content and will be published on to student personal timetables, where they apply to taken modules, as soon as they are finalised by central administration. This will usually be after the initial publication of the teaching timetable for the relevant semester.

Reading list

https://readinglists.surrey.ac.uk
Upon accessing the reading list, please search for the module using the module code: ECO3044

Other information

Consistent with Surrey's curriculum framework, the department of Economics within the School of Social Sciences is committed to developing graduates with strengths in employability, digital capabilities, global and cultural capabilities, sustainability, and resourcefulness and resilience. This module is designed to allow students to develop knowledge, skills, and capabilities in the following areas: 

Employability:
Through the module's learning and assessment activities, particularly the individual Chief Financial Officer (CFO) Report and the Options Trading Project, students develop independent judgement, analytical thinking, and professional communication skills. The group-based project further enhances teamwork and collaboration, requiring students to work effectively towards shared objectives. Across these activities, students are encouraged to reflect critically on their decisions and performance, strengthening their ability to operate in professional financial environments.

Digital Capabilities:
Students engage extensively with spreadsheet software and financial trading platforms throughout the module. Spreadsheet tools are used to implement models, perform calculations, and translate theoretical concepts into practical outcomes, thereby reinforcing understanding and building confidence. The use of trading software in the group project provides hands-on experience of market environments, allowing students to apply theoretical knowledge in realistic settings and develop practical trading skills.

Resourcefulness and Resilience:
The module fosters resourcefulness and resilience by encouraging students to take an active role in their learning and respond constructively to feedback. Collaborative work within the group project supports the development of effective communication and teamwork skills, while structured feedback opportunities enable students to identify strengths and areas for improvement. This process helps students build confidence, adaptability, and a reflective approach to their academic and professional development.

Programmes this module appears in

Please note that the information detailed within this record is accurate at the time of publishing and may be subject to change. This record contains information for the most up to date version of the programme / module for the 2027/8 academic year.