Customer Reviews

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

5 star:		(14)
4 star:		(0)
3 star:		(1)
2 star:		(0)
1 star:		(2)

 

 

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!! : )

After reading the comments of another anonymous 'reader from Seattle'(although I suspect him to have a house in New York as well) it suddenly struck me that maybe a bit more expectations management is necessary here. The goal of Structured Equity Derivatives is not to improve the state-of-the-art and tell experienced professionals how they can further improve their act (although I am almost flattered by the fact that our reader from Seattle still found something that he could not get from his own collegues). Instead, the goal of the book is to offer students and relative newcomers a quick but at the same time thorough way to come to grips with this complex area. The sparse use of mathematics and ample use of graphs are all aimed towards that goal. People that are only interested in the mathematics of derivatives or in mind-boggling new nonsense structures should not buy this book (or be allowed to write reviews on it).

I view and judge this book from a Structured Equity Derivatives Sales point of view. First the chapters:
1) the General Framework
2) Stocks and Market Indices
3) Special Contract Features
4) Index Linked Cash Flows
5) Pricing and Hedging
6) Improving Efficiency
7) Risk Management
8) Reducing the Cost of Buying Options
9) Equity Linked Notes
10) Raising the Participation Rate
11) Market Timing and Non-Bullish Views
12) Digital and Coupon Bearing Notes
13) Equity Linked Savings
First 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...

Very good book on structuring of derivaties. Yes, this book is mainly on structuring not pricing and some reviewers seem to forget about that blaiming it on the lack of mind-boggling maths! Good one for someone who is new in the area or read some introductory books as Hull; everything is really decomoposed into easily understandable pieces so that you can understad every possible structure. Strong recommendation for those who want to _really_ understand structuring of derivatives.

For my postgrad course, I have read a number of books to get an understanding of the world of Derivatives. Books from Hull and Natzenberg are a good introduction, but when it comes to the use of derivatives I find them rather poor. This book from Dr.Kat has done it, it gives a look into the kitchen of the derivative structurer. It is written in a pleasant way, without number cunching and extreme mathimatical equitations. It gives and UNDERSTANDING and that is what makes this book so unique.

Well done Dr. Kat with this masterpiece!!!!!!!!!!!!!!

I was lucky enough to have studied this book for my Financial Engineering course during my MSc.
Harry Kat manages to present an otherwise complicated topic, by other authors, professionals or professors, as an easy to understand, logical and highly attractive subject. As a result I believe that this book is aimed at students who wish to understand the basics of equity derivatives, or investors who wish to communicate better with their brokers and understand how to add features to their contracts in order to make them more suitable to their interests and wallets.
I strongly recommend this book to anyone who wishes to understand the essence of structured equity derivatives without getting confused and bogged down by unnecessary quants.

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 is definitely a very useful book for students taking financial engineering courses or complete newcomers in the aera of structuring. The book's written in a very clear and approachable manner and the author doesn't bother you with obscur mathematics. However, being myself a structurer of derivative products, I must unfortunately say that this book didn't really improve my knowledge in the field of structuring. But since I believe that Dr. Kat's main objective was to primarily target newcomers in the area of structured products, and not any professionals working in the business, I still think that the book is a respectable achievement.

A reader from New York recently posted a fairly negative review of my book Structured Equity Derivatives. I am open to constructive criticism but although this review certainly classifies as criticism, it can hardly be called constructive. Yes, the lack of mathematics is indeed amazing, isn't it. However, that is a good, not a bad thing. In fact, for many people it is one of the main attractions of the book. Yes, structurers working in the derivatives industry may not find too many new things in the book (although many people think they know a lot more than they actually do). Again, there is nothing wrong with that. The goal of the book is to offer newcomers and outsiders an easy but at the same time detailed look into the kitchen, not to improve the current state-of-the-art. Finally, I strongly resent the suggestion that the structures discussed in the book are all standard. The book may not contain the latest 'flavour of the month' but that is not the intention nor possible. I can assure you that the book does contain a detailed discussion of many different exotic structures. The reviewer would have known this if he had read past chapter 6.

Although this should not be taken as common policy, I will for once gladly refund the reviewer my share of the proceeds of the book to partially make up for (what he perceives as) his loss. Just give me your name and address and I will mail you a cheque. My e-mail address is in the 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"