Options, Futures, and Other Derivatives¶
Hull, J. C. (2018). Options, Futures, and Other Derivatives. Pearson.
Cited by¶
7 citations across 7 artifacts.
Each citation links to the sentence it supports in the citing article.
Primes¶
- Contact-Response Decomposition
- Control and signal processing: output = input × gain; disturbance rejection acts either on the input (filter, shield) or on the per-unit gain (attenuate, notch). Finance: position risk = size × sensitivity (delta, duration, beta); hedging acts on either side.
This sourceDefines position risk via sensitivity measures (delta, duration, beta) times exposure, and hedging acting on either factor.
- Control and signal processing: output = input × gain; disturbance rejection acts either on the input (filter, shield) or on the per-unit gain (attenuate, notch). Finance: position risk = size × sensitivity (delta, duration, beta); hedging acts on either side.
- Future Or Promise
- In finance it is futures contracts (a standardized obligation to deliver at a fixed date and price), forwards, options as conditional futures, and insurance claims as conditional fulfillments.
This sourceStandard reference on futures and forward contracts as standardized obligations to deliver at a fixed date and price, clearinghouse enforcement, and options as conditional claims.
- In finance it is futures contracts (a standardized obligation to deliver at a fixed date and price), forwards, options as conditional futures, and insurance claims as conditional fulfillments.
- Optionality
- A financial analyst reasoning about option exercise windows ("Should we exercise the call before expiration?") is using the same logic as a career counselor reasoning about skill development ("How long can she defer specialization before her option to pivot expires?") or a product manager reasoning about feature development ("At what point do we commit to a customer interface design, vs. keeping it modular?"), all using the same option-pricing logic systematized in Hull's (2017) standard reference.
This sourceStandard graduate textbook on derivative pricing and option theory; systematizes the reasoning about payoff asymmetry, path dependence, time value, and exercise timing that transfers across financial and non-financial decision contexts.
- A financial analyst reasoning about option exercise windows ("Should we exercise the call before expiration?") is using the same logic as a career counselor reasoning about skill development ("How long can she defer specialization before her option to pivot expires?") or a product manager reasoning about feature development ("At what point do we commit to a customer interface design, vs. keeping it modular?"), all using the same option-pricing logic systematized in Hull's (2017) standard reference.
- Proxy-Target Divergence
- In finance, basis-risk failure decouples a hedging instrument from the hedged exposure under stress, and parametric catastrophe-bond triggers fire on wind speed but not insurable loss.
This sourceDefines basis risk and the cross-hedge (Ch. 3): a hedge built on a correlated proxy instrument (e.g., heating-oil futures for jet fuel) fails when the basis widens under stress.
- In finance, basis-risk failure decouples a hedging instrument from the hedged exposure under stress, and parametric catastrophe-bond triggers fire on wind speed but not insurable loss.
- Random Walk
- The prime's √n dispersion law is the working tool of risk management: because return variances add under independence, the volatility of a holding scales with the square root of the horizon — the "square-root-of-time" rule used to convert daily volatility into monthly or annual risk and to size value-at-risk limits.
This sourceStandard reference for the 'square-root-of-time' rule: under independent returns, volatility scales with the square root of the holding horizon, used to size value-at-risk.
- The prime's √n dispersion law is the working tool of risk management: because return variances add under independence, the volatility of a holding scales with the square root of the horizon — the "square-root-of-time" rule used to convert daily volatility into monthly or annual risk and to size value-at-risk limits.
- Risk Transfer
- In finance, futures, forwards, options, and credit-default swaps transfer specific price, rate, or default risks to counterparties with offsetting exposures or appetite.
This sourceStandard reference on how futures, forwards, options, and credit-default swaps transfer price, rate, and default risk to counterparties.
- In finance, futures, forwards, options, and credit-default swaps transfer specific price, rate, or default risks to counterparties with offsetting exposures or appetite.
- Validity-ending Event
- In finance it is option expiry, contract termination, and insurance lapse, where the expiry of an option is precisely a validity-ending event with an automatic clock-based trigger and a defined post-expiry treatment.
This sourceOption expiry as a clock-triggered validity-ending event with a defined post-expiry treatment.
- In finance it is option expiry, contract termination, and insurance lapse, where the expiry of an option is precisely a validity-ending event with an automatic clock-based trigger and a defined post-expiry treatment.
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Links previously used in the corpus¶
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- https://www.pearson.com/en-us/subject-catalog/p/options-futures-and-other-derivatives/P200000008765 ×1
- https://www.pearson.com/store/p/options-futures-and-other-derivatives/P200000008765 ×1
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