Derivative-security

While it will be sufficient as a primer for entrants to the arcane world of the various branches of OTC derivatives especially in the fixed income area ...

I suspect that many topics & inferences were plugged in from the author's many other publications which had been pretty prolific & churned out every other year ...

I will only recommend it as an introductory book for the student or new professional, but probably not relevant if you are a serious (or half serious) practitioner looking to keep abreast with the competition or the academics, and hoping to find something which you already do not know nor hear about.

There is little written on structured finance from objective observers of the market. You'll want to add this to your collection.

Had I only had this book at the beginning of my Sales career, life would have been much easier. The book is unique in many ways. First, it's the only book I know of which covers such a wide range of products. Second, product examples are often supported by money-flow-diagramms (e.g. Investor, Issuer, Swap Desk). Never seen that before. Third, termsheet-like examples are given to most of the products for better understanding. In this way, it's a book for investors/sales alike. It's simple and clear with no math at all. Level: Beginners - Advanced. The pro will miss more and up-to-date products, but how can a book provide that?

Topics coverred like: Interest rate / Currency / Commodity / Equity / Credit / Inflation / Insurance linked Notes. Taxation and Market for Structured Products.

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 don't know what the occupation of the reader from Seattle is (Anonymous?), but for students of finance, like myself, who are looking for an easy understanding of how the derivatives industry works and what are the more common products traded on it, beginning with the less complex like calls, puts, followed by more complex derivatives structures and how to hedge the exposure of each of those products with out the use of complex maths, the Structured Equity Derivatives is a well written book that has help me to understand much better the world of the derivatives industry. Actually it has help me much more than other books talking about the same subject but in a different way.

This book has clearly shown me how all the theory I learnt from books such as Hull, Natenberg and Taleb gets applied in practice.
Prof. Kat ingeniously makes the reader understand many option strategies such as risk-reversals, call-spreads, rainbow options, alternative options etc... without throwing them at the reader. He makes the reader figure them out by himself; and this guarantees they will never be forgotten.
Prof. Kat's book also includes an excellent overview of how to structure and market derivative products to the retail investor.
All in all, I strongly recommend this book... It is EXCELLENT!

"Structured Derivatives" is very well written and gives nothing but pure pleasure. Mr. Matto has done a great job at explaining complex topics, and hence has provided a great deal of insight in the subject. The is book that is structured very thoughtfully and defines integrity. Once again reminding that this is a book that should be read by all the derivative traders out there.

.... [This] book says it proves the Black-Scholes equation. Hence why
does it reveal anything new about trading options as you have
indicated that you have done personally and why would anyone pay [this much money]
or more not to find out anything of use? .... I might have paid [half of the price] for the comic relief,
such as the following. Your comment that you have proven why markets
rise when the market aggregate put/call ratio increases doesn't seem
to make sense. Put premiums maybe prepaid costs of default ( in a
perverted sense as discussed below) but the point of a put is to earn
a return above the premium, ie it is expected that the market will
decline; no one pays a premium to incur an overall loss. I don't
think you have explained it at all. Almost any theorem can be
justified by (selective) statistics. As Mark Twain said; 'there are
lies, damn lies, and statistics". Further I believe you play
with words as much or more than the experts you condemn, many of them
Nobel prize winners (Black, Scholes, Merton, Samuelson). All
specialties create their own jargon but I don't think this is a
reflection of shimary. For instance your use of the phrase that
'options are prepaid costs of default' is a complete distortion of the
word 'default', which is defined to be a breach of contract on an
obligation; whereas under an option contract no one breaches anything
in complying with the contract. Instead your complaint that an option
is not a right to anything , but an obligation, is a total
misrepresentation of the fact that the right exists before exercise or
expiry pending the future price results of the underlying. For
instance, in the case of a call, 'I have the right to acquire the
underlying, which I will do if the price increases before expiry'. At
least the right was a right for a period of time; your default never
occurs and is totally vacuous. Finally you say that that while tha
B/S equation is right for stocks, it is wrong for everything else. Yet
you quote no statistics to support your case; would this have not been
a good time to go to the stats and perhaps earn your $60? As Einstein
said, all theories are worthless if not based on empirical evidence;
or was he another idiot? However in terms on showmanship, I applaud;
but intellectual rigor? I think not!

Finally, a book that has an in-depth, technical review of options and derivatives is here. Helpful explanations follow the analysis made. A great book to use to learn and to think about options and option valuation. I enjoyed it!