Suggestions for further reading and zero value derivatives

We've had a suggestion from Chris Rogers for further reading for people new to the subject. He says that John Hull's book "Options, Futures and other Derivative Securities" is a good accessible introduction to the area.

Also, Chris answered Vaibhav's question: Yes, a derivative can have a value of zero. A down-and-out option will have zero value once the price of the underlying asset falls below a specified threshold. Also an interest-rate swap could have zero value at inception, where one party swaps floating interest payments for payments at a
fixed rate calculated to make the two payment streams exchanged of
equal value.


  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd>
  • Lines and paragraphs break automatically.

More information about formatting options

To prevent automated spam submissions leave this field empty.
By submitting this form, you accept the Mollom privacy policy.