Memorizing equity derivatives formulas?

CFA Level III
#1

How do you guys do it? There are so many and they look so similar…

Schweser says it’s easier to watch the videos, but I got the Schweser Essential Package (which apparently doesn’t include them) and I’m not willing to pay additional 400$ to upgrade it…any idea?

Thanks!

#2

So many equity derivatives formulas?

Try working through a few examples and it falls into place…I think?

Unless I have miised a load of formulas?

#3

Was this meant for L1 or L2?

#4

You mean the option strategies like straddles, butterflies, spreads? It’s not as bad as memorizing those freakin tax formulas…

#5

Don’t memorize anything. Just know what they are and everything there after should be intuitive. For example, if you know how to set up a bull spread- you should know how to find its ending value by common sense as opposed to some “ending value” formula you memorized. Fwiw, I find the same with the tax formulas. They’re very intuitive, so as opposed to straight memorizing just understand what they are (are you compounding before or after the tax, etc). Just my $.02USD.

#6

I agree with the monkey…if you can have a good grip on the concepts behind the formulas, you can just think through them without having to straight memorize. Goes for both tax and these deriv formulas. For the options, would have to probably memorize the positions that make up the different spreads - I know I will. But if you can understand the cost/payoff for the individual positions, you can arrive at profit/breakeven or whatever else you have to figure out by thinking through it.

#7

Thanks, I’ll give it a try

@cgottuso8190 : no, I was referring to Level 3 only

#8

I suggest you watch David Heatheringtons video on that. Watch it once and you will never forget it. They are quite intuitive.

You know how a straddle looks like - so what combinations of LC, LP, SC or SP would get that pay off diagram? He explains it so well. Good luck.

#9

Memorize every single formula you can cause you can never predict what will be on the exam. I ditched few last year and I failed because of that. Just give it your best.