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

"It has been said that in theory, theory translates into practice, but in practice it never does. This breakthrough book defies this conventional wisdom in a unique way. It is a must read for anyone interested in structuring derivatives products." — Dr Peter Carr, Principal, Banc of America Securities

"Harry Kat has done a masterful job explaining the world of exotic options and the role that these options play in building structured securities. Dr Kat conveys the essence of these products from the perspective of a very experienced financial engineer but in a fashion that the less experienced reader can easily follow and understand. In this, Dr Kat has shown himself to be a marvellous teacher. I'm confident that this book will prove to be one of the classics to be read by future generations of financial engineers." — John F. Marshall, Principal, Marshall, Tucker & Associates, and Founding Executive Director, International Association of Financial Engineers

"This is a refreshingly new and different book about putting together structured equity products. It is not a book about deriving formulas but a book about applying formulas. The emphasis on hedging costs and alternative ways of reducing those costs by modifying the structure will be appreciated both by those who actually manufacture and sell these products and those who buy them." — Don Chance, First Union Professor, Virginia Tech
"This book is about applications, about solving real business problems with derivatives.... Contrary to many other books in the field, the approach is managerial rather than abstractly mathematical, aimed at practitioners instead of applied mathematicians. Professor Kat's book contains all the mathematics required. However, the mathematical aspects play a purely supportive role, not the starring role. Bravo!"
— Anthony F. Herbst, University of Texas at El Paso, Founding Editor, The Journal of Financial Engineering

"It is certainly a unique book, much more useful that most new books on derivatives. In a nutshell, this book is very creatively done and a great resource for professionals."
— Mark Rubinstein, Paul Stephens Professor of Applied Investment Analysis, University of California at Berkeley

Although the pricing and hedging of derivatives contracts has been the subject of a large number of books, hardly any books exist on the actual design of derivatives contracts. Structured Equity Derivatives fills this gap in a remarkable way. The book introduces an approach to the structuring and practical application of derivatives that allows the reader to create his own derivatives solutions to an endless variety of problems. The approach is extremely natural - the only limit is the reader's own creativity.

Since it clearly explains the reasons why derivatives exist and why there is such a large variety, this is the book that should be read before picking up any other book on the pricing and hedging of derivatives. As the book concentrates on product design instead of pricing, there are no complex pricing formulas or numerical procedures. The emphasis is on intuition and common sense rather than complex formal results, which makes the book accessible to people from many different backgrounds.

Booknews

This guide for financial professionals describes how the structuring of derivatives may be used to solve business problems. Kat's (finance, U. of Reading, UK) approach to derivatives structuring is based upon cash flow. The first five chapters present the basic principles of Kat's approach. This is followed by eight more chapters in which these principles are applied to real-life business problems. The text focuses on derivative product design, rather than pricing, and contains no complex pricing formulas or numerical procedures. Annotation c. Book News, Inc., Portland, OR (booknews.com)

HARRY M. KAT has over 12 years of experience in global capital markets, lastly as Head of Equity Derivatives Europe at Bank of America in London. Prior to that he was Head of Derivatives Structuring and Marketing at First Chicago in Tokyo and Head of Derivatives Research at MeesPierson in Amsterdam. He holds MBA and PhD degrees in economics and econometrics from the University of Amsterdam and is a member of the editorial board of The Journal of Derivatives and The Journal of Alternative Investments. Dr Kat has published extensively in the field of derivatives in well-known journals such as The Journal of Financial Engineering, The Journal of Derivatives, Applied Mathematical Finance and Risk. He is currently Associate Professor of Finance at the ISMA Centre at the University of Reading (UK), where he lectures on financial engineering and structured derivatives, and acts as a consultant to a select number of asset managers and hedge funds.