Derivatives: A PowerPlus Picture Book

Abstract

Over the last 20 years futures and options have gone from being a “niche” subject with limited class enrollments to a standard class which almost every finance major takes. In keeping with the growth in class enrollment has been the growth in the number of textbooks for these classes. There are now available numerous books which cover the basic material plus books which cover various subareas such as fixed income derivatives, credit derivatives, value-at-risk, and the more technical aspects of derivative pricing. Unfortunately many of these books are unnecessarily dry and lacking in economic intuition. An interesting alternative to the current crop of books is Derivatives: A PowerPlus Picture Book , by Mark Rubinstein. This book merits special attention for a number of reasons. First, Professor Rubinstein is a well-known scholar in the area of derivatives pricing and the coauthor of one of the earliest and still one of the best textbooks on options pricing, Options Markets (with John Cox). Second, the PowerPlus Picture Book is a much more sophisticated product than a standard textbook. Aside from the content, the Picture Book is worth looking at as an interesting example of what a new generation of textbooks might look like. The Picture Book is a set of PowerPoint slides with hyperlinked computer applications plus a book which on each page presents a miniature copy of a slide and text which expands on the material on that slide. This is quite different from other textbooks which supply slides and spreadsheets as an afterthought. Here, the slides and computer applications are the heart of the product and the book plays a supporting role. The slides are hyperlinked to several types of material. One is “Matlab for Derivatives.” This is an extremely nice program which is easy to use and computes everything you might want (prices, greeks, graphs, payoff diagrams, binomial trees, volatility smiles, CDF functions) and more. When a reader links to this program from a particular slide the reader is presented with a relevant example and cued on how to alter the example in a way which illustrates the point currently being made. At that point a curious student could continue to explore the material on their own or they can return to the slide. The slides also link to other material, such as interactive chapter quizzes, worked examples, Rubinstein's Options Calculator and options.live . Updates and additional features can be seen by visiting the Picture Book 's web site at: www.in-the-money.com.