CFA: 10 CE Credit Hours*
CFP: 10 CE Credits
NJ Board of Accountancy:
12 CPE Credits
IMCA: 12 CE hours
* Rutgers University has registered this program for 10 CE credit hours with CFA Institute. If you are a CFA Institute member, CE credit for your participation in this program will be automatically recorded in your CE Diary.
“I took the course in March, 2009. I found it to be a very thorough survey of options theory and practice. Sean Heron, the instructor, was well versed in the use of options and a competent, enthusiastic advocate and teacher. I recommend the ICFA/Options course to all investment professionals who wish to expand their understanding of options and their
characteristics, within a portfolio construction and management context.”
Thomas F. McKeon, CFA
Chief Investment Officer
West Chester Capital Advisors
in partnership with
Program Overview
Trading equity options is one of the key strategies used by investment professionals. This course is specifically designed for the individual who has first hand knowledge of the financial market and wants to expand his/her investment knowledge to include strategies that use equity options. The course will educate practitioners on simple ways to use options to transfer (hedge) or accept (speculate) risk.
Program Faculty
Sean E. Heron, CFA
Adjunct Professor of Finance at Rutgers School of Business—Camden.
Sean is a Derivatives Trader and Portfolio Manager for The Glenmede Trust Company. In his role as a portfolio manager, Mr. Heron manages an in-house mutual fund and separately managed accounts for affluent individuals, families, foundations, and trusts. He is also an instructor for the CFA Exam and Adjunct Professor at Rutgers University. Prior to joining Glenmede, Mr. Heron traded equity options at Goldman Sachs.
Eric Cott
Guest Instructor - The Options Industry Council
As a representative for The Options Industry Council and serving as Director, Financial Advisor Education, Eric Cott endeavors to help advisors and their firms to use options more effectively. Mr. Cott is responsible for participating in panel discussions, presenting advisor-oriented educational seminars, and developing options curriculum and content.
Curriculum
Tuesday, December 1, 2009 - 9 AM to Noon
Basic Option Topics
• Define common Equity Option terms.
• Discuss who should uses options and why.
• Compare risk/reward for buyers of options vs. sellers.
• Discuss the differences between In-, Out-, and At-the money options.
• Illustrate the risk/return payoff graphs for long and short, calls, puts.
• Calculate the Breakevens, Max gain/loss of single option strategies.
• Illustrate the risk/return payoff graphs for Straddles, Strangles, Bull Spreads and Bear Spreads.
• Calculate the Breakevens, Max gain/loss of combination option strategies.
Tuesday, December 1, 2009 - 1 PM to 3:30 PM
Intermediate Option Topics
• Demonstrate how to find Free online Articles, Webinars and Trading Tools to enhance your practice.
• Explain call and put prices (option premium) in terms of intrinsic and extrinsic (time) value.
• Discuss the six components of an option’s price: stock price, strike, volatility, time, interest, dividends.
• Define and explain the “Greeks:” delta, gamma, vega, rho, and theta.
• Discuss how varying each of the six input variables will change the output variables (“greeks”).
• Explain how the change in each variable affects In-, Out- and At-the money options differently.
• Demonstrate how options are governed by the law of one price.
• Demonstrate synthetics and reversal/conversions.
• Discuss how different combinations of a stock, put, and call can create synthetic stock, put or call.
Wednesday, December 2, 2009 - 9 AM to Noon
Advanced Option Topics
• Extensive discussion about volatility.
• What is historic, implied, expected and realized volatility?
• Define and discuss the differences of each type of volatility.
• Discuss the drivers of implied volatility and how a trader’s expected future volatility may be different.
• Show examples of more complex strategies that use options to generate yield, manage risk or speculate.
• Discuss the advantages and disadvantages of each strategy.
• Discuss the most appropriate time to initiate each strategy.
Wednesday, December 2, 2009 - 1:00 PM to 3:30 PM
Case Studies - DIY or Sub-Advise?
• Partnering up with a third party asset manager
- Differentiate your practice, without the operational burdens of
trading options.
• Apply everything learned from first three classes.
• Portfolio Recovery Strategy
- Increase upside participation without increasing downside risk.
•Portfolio Protection Strategy
- Demonstrate how to use index options to protect the whole
portfolio or speculate (leverage).
• Enhanced Income Strategy
- Work through examples of cases involving writing covered calls.
- Discuss the CBOE Buy-write Indexes.
• Discuss the most common ways to use options to manage the risks of a concentrated position.
• Discuss the advantages and disadvantages of managing risk with equity options.
• Explain how to manage risk in all types of markets
• Work through examples of how to extrapolate what the options market is implying about future price fluctuations.
• Discuss how options behave around earnings announcements, court cases and FDA trials.
Date: April 2010 - Phoenix, AZ
Future Offerings 2010:
Boca Raton, FL
Dallas, TX
Los Angeles, CA