The key Derivatives formulas and decision rules for 2026, module by module. Derivatives is 5-8% of the Level I exam.
Free to read, no sign-up. A revision companion to use alongside your curriculum or prep provider. The full sheet (10 concepts, 10 formulas, 2 decision rules) is in the study dashboard.
The ones to know cold before exam day.
Key concepts and formulas from each of the 2 Derivatives modules. Open a module for its lesson page, or the dashboard for the full sheet.
OTC agreement to buy/sell asset at predetermined price on future date. Customizable. Counterparty risk. No upfront cost.
Exchange-traded standardized forward. Daily settlement (mark-to-market). Clearinghouse eliminates counterparty risk.
Where: ST = spot price at expiry, F0 = forward price
Where: X = strike price
Full sheet: 5 concepts · 5 formulas · 1 decision rules
Derivatives priced so no riskless profit is possible. If mispriced, arbitrageurs act to restore equilibrium.
A derivative can be replicated by a portfolio of the underlying and risk-free asset. Replication cost = derivative price.
Where: S = spot, r = risk-free rate, T = time
Where: q = continuous dividend yield
Full sheet: 5 concepts · 5 formulas · 1 decision rules
Start with the free module, then add your own notes to every Derivatives cheat sheet in the dashboard.