# Level III Derivatives

## Delta Hedging

There are two applications of delta hedging presented in the CFA curriculum: You have an existing position in the underlying security and you want to hedge that position with options. You have an existing position in options and you want to hedge that position either with the underlying security or with options. I’ll cover both […]

CFA® Level II Derivatives Membership, CFA® Level II Membership, CFA® Level III Membership

This will give you access to this and all other articles at that membership level.

If you haven’t read the article on option strategies in general, that’s a good place to start, then return here. In particular, if you haven’t read the warning about calculating profit that appears at the end of that article, you should go read it now; the way I’m calculating the profit here is correct, but […]

CFA® Level II Derivatives Membership, CFA® Level II Membership, CFA® Level III Membership

This will give you access to this and all other articles at that membership level.

## Strangle

If you haven’t read the article on option strategies in general, that’s a good place to start, then return here. In particular, if you haven’t read the warning about calculating profit that appears at the end of that article, you should go read it now; the way I’m calculating the profit here is correct, but […]

CFA® Level II Derivatives Membership, CFA® Level II Membership, CFA® Level III Membership

This will give you access to this and all other articles at that membership level.

If you haven’t read the article on option strategies in general, that’s a good place to start, then return here. In particular, if you haven’t read the warning about calculating profit that appears at the end of that article, you should go read it now; the way I’m calculating the profit here is correct, but […]

CFA® Level II Derivatives Membership, CFA® Level II Membership, CFA® Level III Membership

This will give you access to this and all other articles at that membership level.

## (Equity) Collar

If you haven’t read the article on option strategies in general, that’s a good place to start, then return here. In particular, if you haven’t read the warning about calculating profit that appears at the end of that article, you should go read it now; the way I’m calculating the profit here is correct, but […]

CFA® Level II Derivatives Membership, CFA® Level II Membership, CFA® Level III Membership

This will give you access to this and all other articles at that membership level.

If you haven’t read the article on option strategies in general, that’s a good place to start, then return here. In particular, if you haven’t read the warning about calculating profit that appears at the end of that article, you should go read it now; the way I’m calculating the profit here is correct, but […]

CFA® Level II Derivatives Membership, CFA® Level II Membership, CFA® Level III Membership

This will give you access to this and all other articles at that membership level.

If you haven’t read the article on option strategies in general, that’s a good place to start, then return here. In particular, if you haven’t read the warning about calculating profit that appears at the end of that article, you should go read it now; the way I’m calculating the profit here is correct, but […]

CFA® Level II Derivatives Membership, CFA® Level II Membership, CFA® Level III Membership

This will give you access to this and all other articles at that membership level.

## Adjusting the Allocation of an Equity/Fixed Income Portfolio using Equity/Bond Futures

Adjusting Allocation Only Adjusting the allocation of a portfolio that comprises both equity and fixed income is nothing more than a combination of: Adjusting the value of the equity portion of the portfolio by a given amount (up or down), and Adjusting the value of the fixed income portion of the portfolio by that same […]

CFA® Level III Membership

This will give you access to this and all other articles at that membership level.

## The Synthetics: Cash, Equity, and Fixed Income

Creating synthetic cash from an equity portfolio or a fixed income portfolio, creating synthetic equity from cash, and creating synthetic bonds from cash are, in principle, no different than adjusting the value/beta of an equity portfolio, or adjusting the value/duration of a fixed income portfolio, except for that one pesky characteristic of cash: cash always […]

CFA® Level III Membership

This will give you access to this and all other articles at that membership level.

## Adjusting the Value/Duration of a Fixed Income Portfolio using Bond Futures

Adjusting the Value of a Fixed Income Portfolio The typical formula for computing the number of bond futures contracts needed to adjust the value of a fixed income portfolio is: $N_f\ =\ \frac{V_T\ -\ V_P}{V_f}\left(\frac{Dur_P}{Dur_f}\right)\left(yield\ \beta\right)$ where: $N_f$: number of bond futures contracts to buy (i.e., take the long position) or sell (i.e., take the […]