Options, Futures and Other Derivatives (6th Edition) | John C. Hull

Options, Futures and Other Derivatives (6th Edition) | John C. Hull | Good overview but not very student-friendly

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Options, Futures a...

	Options, Futures and Other Derivatives (6th Edition) John C. Hull Prentice Hall, 2005 - 816 pages average customer review:based on 71 reviews view larger image
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highly recommended

This is still the best intro level book on derivatives.

I took Prof Hull's Advanced Risk Management class a few years ago with lecture notes. I also have the previous edition of this book, but I still bought this one. It took me three days to read the book cover-to-cover, and I have to say I still enjoy reading it very much. Assuming minimum math background (basic calculus and prob theory), Prof Hull introduced the world of derivatives, pricing, risk mgmt in plain English. By far, it's still the best introductory level book on derivatives, with balanced treatment of pde and risk-neutral valuation (not like Wilmott's book - almost 100% pde and ignoring risk-neutral altogether). For a bit more advanced reading, Neftci's Intro to Math of Derivatives is a good one. However, to have a complete picture of derivatives pricing, stochastic calculus (at the level of Karatzas & Shreve' Brownian Motion and Stochastic Calculus) is a must, which will instead need a fair exposure to real analysis, measure-theory level prob theory, and ode/pde. For readers who want some knowledge of derivatives but don't want to be quant, Hull's book pretty much tells you everything you ever want to know about derivatives.

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Good overview but not very student-friendly

The book has its merits- it is comprehensive, has all the right materials, and also the derivations of all the complicated formulae. However, the manner in which the material is presented can only be described as unimaginative. There is a constant stream of cross-references throughout the book, which will leave the reader feeling frustrated. The book goes forward in fits and starts and there is a distinct lack of cohesion in the treatise. Also, the book assumes that the reader is not mathematically sophisticated, but uses shortcuts and jumps computational steps regularly, which adds to the students' woes. The description of the different types of options are pleasant to read, and so also is the chapter on value at risk, but the rest of the book leaves the students confused. To read this book, the reader should be adept in using standard mathematical tools like arithmetic and algebra and also be somewhat proficient in probability. However, this book is great for practitioners. I have simulated all sorts of options scenarios, from simple Black-Scholes model, to the AMM approach, barrier options and multinomial models. For each of these models I found direct or indirect help from the Hull book. For beginners, I would recommend the book by Jarrow and Turnbull and advise them to keep this book as a reference for the future.

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Good book for academics, not for traders

The book is written in arcane language. If you know nothing about futures for example, this book will make you even more confused. There is undoubtedly a great theoretical value to the book, so if you want to pursue a career in academic finance you definitely need to peruse this book.

reviews: 1, 2, 3, 4, 5, 6, 7, 8, page 9, 10, 11, 12, 13, 14, 15

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