Whoever has watched "The Wolf of Wall Street" has likely struggled to understand the jobs, products, jargon that surround financial markets. Some of us are still trying to get our way out of this financial jungle and clarify the associated strategies. Let's demystify these!
In close collaboration with PwC's subject matter experts, PwC's Academy has developed a comprehensive, multi-layered training curriculum for junior and more experienced financial industries’ employees and managers alike, who seek to gain a solid knowledge of derivative instruments.
With this second module on options, participants will refresh the basic feature of the product and the attached valuation principles. Participants will add a second layer on their comprehension through the exploration of the lifecycle, the accounting treatment and finally the impact on the financial statements.
To complement your learning journey, please check our Derivative instruments curriculum.
Duration: 2h30
Language: Available in English and French. The supporting material is only available in English.
Number of participants: up to 15
Available as intra-company course (i.e. dedicated session on demand)
Objectives
By the end of this training, participants will be able to:
- describe the key features of options;
- develop a comprehensive understanding of their operational mechanisms;
- identify optimal use cases for these instruments, either independently or in combination with others;
- explain valuation methods and factors influencing the value of options;
- recognise major risks and propose controls to mitigate them.
Content
- 1. Introduction
- a) Refresher of derivatives foundation modules
- Overview of derivative instruments (e.g., forwards, futures, options, swaps)
- Types of derivatives (e.g., equity, commodity, interest rate, foreign exchange)
- Purpose: risk management (hedging) and speculative trading
- b) Recap of valuation principles applicable to the accounting treatment
- Methods for determining fair value: market value, mark-to-market, Black-Scholes model
- Accounting for fair value changes over time
- a) Refresher of derivatives foundation modules
- 2. Types
- Understanding options
- Definition of options contracts
- Key terminology: calls, puts, strike price, expiration date, underlying asset
- How options differ from other financial instruments (e.g., stocks, bonds)
- 3. Lifecycle of the instruments
- Creation of the contract
- Premium
- Trade execution and agreement
- Cashflow exchanges during the life of the instrument
- Settlement
- Summary of differences
- 4. Accounting treatments under IFRS
- Initial recognition
- Subsequent measurement
- Closing treatement/settlement
- 5. Impact on the Financial statements
- Balance sheet
- Income statements
- Cashflows
Target audience
This course is designed for individuals seeking to build on the foundation module by gaining a deeper understanding of options as used by investment managers and financial market participants.
Our lead experts
This training will be coordinated by Laurent Dubois, Director at PwC Luxembourg. The different modules will be presented by experts in derivatives.
Laurent is active in our Assurance practice in managing and delivering a diverse range of assurance engagements toward Alternative and Banking actors to local and international clients and PwC offices.
He has exposure to a wide range of valuation methodologies, a practical understanding of the effective strategies delpoyed by its clients in the context of financial reporting.
Laurent is Réviseur d’entreprises agréé (REA).
