CFA Level 1 Derivatives

Forwards, futures, swaps, options, payoff diagrams, no-arbitrage pricing, and put-call parity for Level 1 review.

2

Modules

10

Concepts

10

Formulas

6

Quiz Questions

Derivatives Study Overview

Derivatives at CFA Level 1 tests whether you can identify contract types, distinguish forward commitments from contingent claims, calculate basic payoffs, and apply no-arbitrage pricing logic. Focus on how forwards, futures, swaps, calls, and puts transfer risk rather than memorizing definitions in isolation.

Compare forwards, futures, swaps, calls, and puts by obligation, right, settlement, counterparty risk, and exchange trading.

Memorize core payoff formulas for long forwards, calls, and puts, then connect each payoff to profit after premium or cost.

Use no-arbitrage logic for forward prices, put-call parity, and simple binomial option valuation.

How to Study This Topic

  • Start with instruments and markets so contract features are clear before pricing formulas.
  • Work the option payoff examples until maximum loss, breakeven, and payoff feel automatic.
  • Review put-call parity as a balance sheet identity: call plus bond equals put plus stock.

Modules in Derivatives

2 learning modules covering 5-7% of the CFA Level I exam.

1

Derivative Instruments and Markets

5 concepts 5 formulas 3 questions
2

Derivative Pricing and Valuation

5 concepts 5 formulas 3 questions

Key Formulas

7 essential formulas for Derivatives.

Forward Price

F₀ = S₀ × (1 + r)T

No-arbitrage forward (no income)

Forward Payoff (Long)

Payoff = S_T - F₀

Gain if spot > forward

Call Payoff

max(0, S_T - X)

Right to buy at strike X

Put Payoff

max(0, X - S_T)

Right to sell at strike X

Put-Call Parity

c + PV(X) = p + S

European options only

Risk-Neutral Probability

πᵤ = (1 + r - d) / (u - d)

Binomial model probability

Binomial Option Value

C = [πᵤCᵤ + (1-πᵤ)C_d] / (1+r)

Discounted expected payoff

Start Studying Derivatives

Dive into 2 modules with cheat sheets, flashcards, quizzes, and mind maps.

Start Derivatives in Dashboard

No signup required. Create an account anytime to save progress.