Options and Swaps Simulation

In the simulation, participants will:

• Trade Options on multiple underlying assets in a live order-book environment.

• Structure and Negotiate Swaps with simulated corporate clients to meet specific hedging or financing needs.

• Manage a Derivatives Book, actively hedging the Greeks to maintain a desired risk profile.

• Price Derivatives using models, adjusting for dividends, interest rates, and implied volatility.

• Develop Client Pitches for derivative solutions tailored to hypothetical corporate scenarios.

• Respond to Market Shocks and adjust their positions accordingly.

• Compete or Collaborate in teams to achieve the best risk-adjusted return or most profitable client book.

• Explain the payoff structures and practical applications of common options strategies and swaps.

• Price vanilla options and interest rate swaps using standard financial models.

• Implement dynamic hedging strategies to manage the market risk (Greeks) of a derivatives portfolio.

• Structure appropriate derivative-based solutions for corporate hedging and speculative needs.

• Analyze the risk/return profile of complex positions and understand their margin requirements.

• Articulate the role of derivatives in financial markets and their impact on overall financial stability.

1. Launch and Training Participants are assigned roles and given initial capital. A guided tutorial introduces the trading platform.

** 2. Live Market Rounds** The simulation progresses through multiple rounds, each representing a trading day or week. Each round features new market data, client RFPs, and macro-economic events.

3. Trading and Execution Participants execute trades on a realistic platform with live quotes, order books, and P&L dashboards. For swaps, they negotiate terms via a structured chat/RFP system.

4. Hedging and Risk Management After taking positions, participants must use the hedging module to manage their exposure, buying/selling underlying assets or other derivatives to neutralize risk.

5. Analysis and Reporting At the end of each round, teams review their P&L, risk metrics, and receive feedback on their hedging efficiency and strategy profitability.

6. Debrief A comprehensive final review compares team performance, analyzes key market events, and solidifies the connection between theory and practice.

• Who is this simulation designed for? This simulation is ideal for MBA students, advanced finance undergraduates, junior analysts at banks and funds, and corporate treasurers seeking practical, hands-on experience with derivatives beyond textbook theory.

• What prerequisites are needed? Familiarity with core concepts like net present value and standard deviation is helpful, but comprehensive pre-materials are provided.

• What is the duration of the simulation? The core simulation can be run as an intensive 1-day workshop or extended over 4-6 sessions in a semester-long course. The platform is flexible to fit your schedule.

• Can it be used for remote or hybrid learning? Absolutely. The simulation is 100% browser-based, allowing participants to engage from anywhere with a stable internet connection, perfect for remote teams or online courses.

• How is pricing for options and swaps determined in the sim? Prices are driven by a market engine that incorporates underlying asset prices, volatility, interest rates, and time to expiry. Participants can use built-in pricing calculators to inform their bids and offers.

• Do participants work individually or in teams? The simulation supports both modes. We typically recommend teams of 3-4 to encourage strategy discussion and role specialization.

• What kind of support is provided during the simulation? Participants have access to a detailed user manual, video tutorials, and real-time chat support from our simulation facilitators. Instructors also receive a full dashboard to monitor all team activity.

• Can the simulation content be customized for our specific program? Yes. We can tailor underlying assets, client scenarios, and complexity levels to align with your course focus, whether it's general derivatives, risk management, or investment banking.

• Risk-adjusted return on capital, accuracy of derivative pricing, efficiency of Greek hedging.

• Quality and appropriateness of proposed swap structures and hedging strategies for client RFPs, profitability of negotiated deals.

• Ability to maintain positions within pre-set risk limits, adherence to simulated regulatory requirements.

• A concise report explaining the team's overall strategy, key decisions, lessons learned from losses, and an analysis of the final portfolio's risk profile.