Derivatives Suck

In the past, there has always been a part of the exam that I had trouble with and tried to over compensate in other areas. Last year I found derivatives to be that area. Truth be told, Derivatives were tough at level 1, but level 2 is an absolute beast. Some level 2 candidates say they don't find derivatives to be the toughest part of the exam. As far as I'm concerned unless you work with them in your job it is the toughest part of the cirriculum or you are on drugs.

Anyway, as you can see, I am working on derivatives right now. This should be about 10% of the exam and it will be hard to pass without getting at least half of this section correct. This is the only section of the exam that I have trouble following conceptually. I know what derivatives are, but valuing them and exploiting arbitrage opportunities at this level has proven hard for me. Right now I am finishing up futures and forwards - both of which I am minimally prepared for. I still have some conceptual problems, but I can value and price them pretty well. Next I go to swaps and options. Last year, I found them to be painful. My performance on derivatives will be the primary determinant of whether or not I pass. The maximum passing score is 70%, though in practice it will probably be closer to 65% or less. Ethics will be 3 or 4 item sets and I will get about 60% of that. Most other areas I should get about 70% - more if I do well. However, the 2 item sets on derivatives could sink me if I don't get at least half right. I will be reviewing heavily over the coming days and probably have an update next week.