Structured Equity Derivatives: The Definitive Guide to Exotic Options and Structured Notes

This is a qualitative book on structuring equity derivatives, which does a great job of covering pricing from a hedging perspective. While written on equities the concepts can easily translate to other asset classes, since there are not many books on the actual design of derivatives contracts this book fills a major gap for practitioners. The book introduces an approach and a philosophy to the process of structuring derivatives. The book takes a non-mathematical but a very lucid approach that is extremely natural from start to finish. I really enjoyed the discussions on improving hedging efficiency, risk management of options, and reducing the cost of buying options. There is also a chapter that covers structures marketed to retail clients.

very clear explanations

Very strong, clear, and comprehensive book

If you have ever taken a class on Derivatives, it is very likely you used the book "Option, Futures, and other Derivatives" by John Hull. Although Hull's book is a great introduction into the field of Derivatives, it is missing some crucial "real world" elements. For example, Hull's chapter on Exotics is pitiful. This book really talks about how to structure exotic derivatives so that it satisfies the hedger's need and giving him nothing more(thus reducing the cost). By learning how to structure these derivatives, you really learn what derivatives really are. This book starts from the ground up, and makes no assumptions to your derivatives knowledge. Like another reviewer has said, this book may not be useful to you if you have been structuring or pricing derivatives at a major i-bank for 10+ years, BUT it is a GREAT introduction to the subject at an advanced undergrad or an early graduate school level. Furthermore, it explains Derivatives from the consumer side, those who may wants a position hedged.In short, This is probably the single best introductory book to exotic equity derivatives I've ever seen. Another good title for this book could have been "Applied Derivatives: A real world guide to structuring derivatives from ground up"

I had to read this book as a requirement for a postgraduate level finance course which I took this year. I found it extremely insightful and easy to understand.I believe (keeping fingers crossed!) that there are a lot of highly technical books out there for those with several years of experience in structured derivatives and the so called rocket scientists. But what about those who don't fall under this category? Where should those new to this field ( structured derivatives) or students who want to grasp a better understanding of derivatives after reading books such a Hull's , start with? This is exactly where Dr. Kat's book comes to picture, with a claim to offer an through understanding of structured derivatives, nothing more or less.Reading criticism such as the one from "reader from Seattle" (below) is surprising to me, specially when he says: "I bought this book with high hopes, but I found little knowledge in it that I couldn't get from my own colleagues. And now, where is the value of reading a long book if all your colleagues know it from the word go?" Well, let me tell you something, it's for those who are not surrounded by "colleagues who know it from the word go"! And, there are a lot of us out there.I bought it with little hopes as a text book for my course, but I found insightful knowledge of derivatives in it, which I couldn't get from a lot of my teachers let alone my colleagues!I highly recommend it to all those who have had an introductory course on derivatives covering books such as Hull's, and want to progress further.Suggestion: Check your colleagues first, if they know the subject, drop the book!! : )

I view and judge this book from a Structured Equity Derivatives Sales point of view. First the chapters:1) the General Framework2) Stocks and Market Indices3) Special Contract Features4) Index Linked Cash Flows5) Pricing and Hedging6) Improving Efficiency7) Risk Management8) Reducing the Cost of Buying Options9) Equity Linked Notes10) Raising the Participation Rate11) Market Timing and Non-Bullish Views12) Digital and Coupon Bearing Notes13) Equity Linked SavingsFirst and foremost, this book is unique in the sense that it concentrates on payoff formulas, rather than mathematical formulas. Congratulation! The author has an excellent theoretical AND practical knowledge of the topic. One recognises the later in the phylosophical notes. What I do not understand though, are the chapters 5,6, or 7 to the overall topic. Sorry, but I sometimes had the feeling the products alone could not fill the book (even though including the questioned chapters, the book is still pretty slim). Nevertheless, the authors comments and analysise and many standard products are very well explained and graphically supported. It's 100% a book for the beginner and semi-pro in the world of structuring/selling/using equity derivatives. The pro might miss some new "hot" structures used today (like worst-of constructions or selection mechanism), but then, no book will ever be that up to date...

This is the best book on structured equity products so far. I contrast to other books Kat takes the perspective of a structurer (i.e. discusses the various payout modifivations in terms of their ability to make a structure cheaper). Harry is a great guy and his book is fun to read but never trivial. I always recommend this book to new members of my group.

Easy approach to understand structured products and the way they are structured