Module Details

BE863-7-SP-CO: Using Financial And Commodity Derivatives In Business

Note: This module is inactive. Visit the Module Directory to view modules and variants offered during the current academic year.

Year: 2017/18
Department: Essex Business School
Essex credit: 10
ECTS credit: 5
Available to Study Abroad / Exchange Students: No
Full Year Module Available to Study Abroad / Exchange Students for a Single Term: No
Outside Option: No

Supervisor: Dr Nick Constantinou
Teaching Staff: Sina Erdal
Contact details: Sina Erdal Email:

Module is taught during the following terms
Autumn Spring Summer

Module Description


The module provides students with a thorough background in the key derivative instruments (forwards, futures, options and swaps) and how businesses can practically apply them to manage different risks in their organisation. The module assumes no prior knowledge of derivatives, but by the end of the module students will have covered a wide array of everyday risks faced by businesses including interest rate risk and commodity price risk. Case studies will be used throughout the module to support student learning on the application of derivatives to manage risks.


This module is designed to allow students to:

1) appreciate how derivative financial contracts can be used to manage everyday global business risks;
2) apply the techniques taught to everyday business contexts;
3) understand the wider implications of the global growth in derivatives.


On completion of this module students should:
1) have a complex understanding of the mechanics of derivatives markets (forwards, futures, options and swaps markets) and their relevance to everyday business operations;
2) be able to determine and evaluate how derivatives contracts are priced and traded;
3) be able to systematically apply different derivative trading strategies to hedge common business risks.


The module consists of ten three hour sessions spread over five weeks that are delivered in the Spring term. Students will be encouraged to engage in participative learning, presentations and intensive group work.

An outline lecture schedule for this module would be:

Week 1 session 1: Introduction to forwards and futures
Cuthbertson and Nitzsche, Chapters 1 and 2.
Hull, Chapters 1 and 2.

Week 1 session 2: Applying forwards and futures to manage business risks
Cuthbertson and Nitzsche, Chapters 3, 4 and 5.
Hull, Chapters 3 and 5.
Case Study material.

Week 2 session 1: Introduction to options
Cuthbertson and Nitzsche, Chapter 7.
Hull, chapter 8.

Week 2 session 2: Options pricing models
Cuthbertson and Nitzsche, Chapter 8.
Hull, chapter 11.

Week 3 session 1: Options pricing models
Cuthbertson and Nitzsche, Chapter 8.
Hull, chapter 13.

Week 3 session 2: Applying options to manage business risks
Cuthbertson and Nitzsche, Chapters 10 and 11.
Hull, Chapter 10.
Case Study material

Week 4 session 1: Introduction to swaps
Cuthbertson and Nitzsche, Chapter 14.
Hull, chapter 7

Week 4 session 2: Using swaps to manage business risks
Cuthbertson and Nitzsche, Chapter 14.
Case Study material

Week 5 sessions 1 & 2: Commodity derivatives
Hull, Chapter 5.
Case Study material

Learning and Teaching Methods

Lectures and group work.


50 per cent Coursework Mark, 50 per cent Exam Mark


The module will be assessed by 50% coursework and 50% two hour closed book examination. The coursework will be a 1500 word individual written assignment.

Exam Duration and Period

2:00 during Summer Examination period.

Other information

ELECTIVE/OPTIONAL module. This module will be taught over one full day per week, during a 5-week teaching block (Weeks: 21-25).


  • Cuthbertson, K. and Nitzsche, D. (2001), Financial Engineering: Derivatives and Risk Management, Wiley
  • Hull, J. (2008), Options, Futures and Other Derivatives, 7th Edition, Prentice Hall.

Further information