Can I Take Probability and Mathematical Intro to Options Concurrently?

[Shackleford]

What is this class like? Is it very hard? I took an intermediate macroeconomic theory course a couple of semesters ago. One of the prerequisites for this class is Probability. I will be taking that next semester. I wonder if I could take these two classes concurrently.

Cr. 3. (3-0). Prerequisites: MATH 2433 and MATH 3338. Arbitrage-free pricing, stock price dynamics, call-put parity, Black-Scholes formula, hedging, pricing of European and American options.

 

[chingkui]

You can study mathematical finance without knowing any economics. Arbitrage pricing is easy conceptually, Black-Scholes is built on arbitrage free and assumptions of asset price fluctuation statistic. You would see Brownian motion and Ito's lemma which is part of stochastic calculus (hence the prerequisites for probability). You are also likely to encounter things like Martingale, sigma algebra, etc., it would be very confusing if you don't have any exposure to concepts in stochastic calculus. Note that even a first course in probability would likely not cover stochastic processes, so I am not sure how the teacher is going to teach this class with just assuming basic knowledge of probability, maybe he/she will cover the needed background in stochastic calculus when it comes up. The best way of course is to ask your teacher what level of knowledge in probability is assumed.

 

[Shackleford]

You can study mathematical finance without knowing any economics. Arbitrage pricing is easy conceptually, Black-Scholes is built on arbitrage free and assumptions of asset price fluctuation statistic. You would see Brownian motion and Ito's lemma which is part of stochastic calculus (hence the prerequisites for probability). You are also likely to encounter things like Martingale, sigma algebra, etc., it would be very confusing if you don't have any exposure to concepts in stochastic calculus. Note that even a first course in probability would likely not cover stochastic processes, so I am not sure how the teacher is going to teach this class with just assuming basic knowledge of probability, maybe he/she will cover the needed background in stochastic calculus when it comes up. The best way of course is to ask your teacher what level of knowledge in probability is assumed.

I emailed the professor and asked if it is possible to take this class and Probability concurrently. He said, "I'd advise against it."

 

[snipez90]

Most likely it won't require most of the math chingkui mentioned. For instance, you can use the Black Scholes formula to price options without understanding the all the mathematical machinery underneath it, which as chingkui hinted at, would probably require a course in stochastic calculus, as well as analysis at the upper undergraduate or graduate level.

And yeah intermediate macro will likely have absolutely no similarities to intro to options (ignoring basic stuff like working with interest).

 

[rezeew]

The Mathematical Intro to Options class is designed to provide students with a theoretical and mathematical understanding of options pricing and hedging. It is a rigorous course that requires a strong foundation in probability and mathematical analysis, as seen in the prerequisites. While it may be challenging, it is a valuable class for those interested in finance and economics. I encourage you to take both Probability and Mathematical Intro to Options concurrently if you feel confident in your mathematical skills and are able to manage the workload. However, it is always best to consult with your academic advisor before taking on a heavy course load to ensure you can effectively balance your studies. Good luck with your future studies!