Derivatives trading has boomed in recent years. The International Council for Derivative Trading has analyzed this to be due to two main reasons: On one hand, the industry trend towards increased use of these tools has continued to grow. On the other, the surge of retail investors wanting to amplify their profits (especially through options), coupled with the advent of cryptocurrency futures, have sent derivative trading volume to once-unthinkable levels. In fact, for the first time in history, in 2020 options trading volume surpassed the underlying shares volume. However, the traditional financial certifications still tend to focus on shares and bonds, and often certify knowledge in derivatives in a very superficial manner, if at all. University education also greatly ignores the derivatives space and only approaches it from a purely theoretical perspective that has little practical use.
About the ICFDT and CFOA
Filling this gap is the goal of a relative newcomer in the financial certification space: The Certified Futures and Options Analyst certification, or CFOA. Sponsored by the International Council for Derivative Trading, a global initiative by industry professionals, this certification is aimed at both professionals and independent investors. Its approach is more practical and strategy-focused, rather than a theoretical perspective concerned with the underlying pricing mechanics. For example, the examination tends to focus on aspects like which option strategies have a superior risk/reward profile in a certain defined situation rather than calculating theoretical value through Black-Scholes. This is especially attractive for those candidates looking to pursue opportunities in the buy-side, although sell-side professionals should also benefit from increased knowledge of investment strategy.
The Future of the CFOA
An ever-increasing number of firms are recognizing the certification and it is helping candidates stand out in a very competitive field. “The hiring manager mentioned my derivatives certification and coding skills as the two key reasons why I was selected”, says a recent titleholder who was hired by a Greenwich-based fund. Access to the certification is still limited, though, and at the time of writing, is currently only possible through an approved training partner, like LA-based TrendUp Now. Despite this, the ICFDT has plans to also open the examination to individual, non sponsored candidates in the near future.
Via: GlobalRelease WIire