Introduction to Derivatives

This lecture provides an introduction to derivatives, covering the history of forward, futures, and options contracts from ancient civilizations to modern standardized markets. It explains the concept of derivative securities, organized exchanges, and over-the-counter markets. The lecture also delves into the definitions and payoffs of forward contracts, long and short positions, and options. Furthermore, it explores the use of derivatives for hedging, speculation, and arbitrage, with practical examples of portfolio insurance and hedging strategies using forwards and puts.