Teach me things... awful things...
February 13, 2014 12:57 PM   Subscribe

I need to learn about financial instruments and trading at an intermediate level. I have a basic, 101-type understanding of how CDOs and CDS-es work and what hedging is, but I need to get to the next level, because I'm still getting lost in conversations where people are talking about complex synthetic CDO strategies, delta hedging, correlation trading, ABCP, and similar topics. Is there a book I can read, a course I can take online, anything you can recommend I do to start getting much more comfortable with this securities stuff at a high level? Thanks in advance for your help!
posted by prefpara to Education (8 answers total) 8 users marked this as a favorite
Try the Claritas course offered by the CFA Institute.
posted by ripley_ at 1:07 PM on February 13, 2014

I'd try Satyjit Das. I confess, I haven't read his books myself. But I have been impressed with his clarity and incisiveness when explaining derivatives trading both as a guest expert on NPR and in his writings for the finance blog Naked Capitalism. He was a trader for twenty five years and was around for the birth of the industry; I find him good at explaining things in a way that grounds you in the fundamental forces and interests at play, which gives you a handhold through some of the more technical bits.
posted by Diablevert at 1:49 PM on February 13, 2014 [1 favorite]

Google is your friend--not the investopedia links, but drill down to things like NYS Bar Association comment letters, alerts from law firms and accounting houses, and whitepapers put out by the various exchanges and organizations (CBOE, Eris Exchange, ISDA).

Also, you may have done this already, but you can sometimes get some great filings from either EDGAR (i.e., to the extent that a structure you're looking at is the subject of a material definitive agreement disclosed in an 8-K (or otherwise)), or from some of the firms that track bankruptcies.

Lastly, since my recollection is you are an esteemed colleague at the bar, does your firm (or employer if you're not at a firm) give you access to PLI? I get free access to their online materials and streaming lectures, and some of it is pretty good. Some of it is not as pretty good.

Good luck!
posted by Admiral Haddock at 1:49 PM on February 13, 2014

The best comprehensive book I know of is Hull's Options, Futures, and other Derivatives. The table of contents is on this page; you can see if the topics cover your needs. It's relatively easy to understand for non-mathematicians. Not cheap, though.
posted by btkuhn at 2:13 PM on February 13, 2014

Some reading on the tax perspective of financial instruments:

JCT report (warning: PDF)

Columbia Tax Journal article

Tax Notes article

If you want to delve deeper and you have access to BNA, check out portfolios 184, 186, and 188. I can also send you some law school/LL.M. outlines I have kicking around somewhere if you memail me.

2nd-ing Hull for a more B-school perspective.

Your basic questions for any instrument are: (1) When/how does each party make/lose money? (2) Why does the instrument need to be structured this way to achieve this allocation of upside/downside risk? The answer to #2 is often taxes or leverage (Edit: hence why learning about how these instruments are taxed can be key to understanding the instruments themselves).
posted by melissasaurus at 2:23 PM on February 13, 2014

"Extreme Money" by Das is the book, as suggested by Diablevert. I have read it and it is what you want. Checkout earlier thread:
posted by PickeringPete at 5:15 PM on February 13, 2014

Erika Nijenhuis, the Cleary tax partner who wrote that Columbia article (which, indeed, taught me everything I needed to know about central clearing under Dodd-Frank) has a number of great write ups if you search for her name.
posted by Admiral Haddock at 11:26 AM on February 14, 2014

Frequent this forum: If you search it, you'll find posts of online courses, but the forum itself is golden.
posted by IAmBroom at 11:53 AM on February 14, 2014

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