Department of Finance Professor Don Chance Breaks Down the Pricing of Financial Derivatives in New Book

Outside of the classroom, Department of Finance Professor Don Chance has made a name for himself as an accomplished author, publishing numerous scholarly articles and textbooks, with one of his main focuses being financial derivatives. In his latest book, Foundations of the Pricing of Financial Derivatives: Theory and Analysis, which is geared towards doctoral and master’s students in finance, Chance and co-author Robert Brooks of the University of Alabama, take a patient approach to an otherwise intimidating topic.

The idea for this book originated in 1996 when Chance began posting teaching notes on the internet that covered various advanced technical topics. After his notes became a collection viewed by people all over the world, he decided to turn these notes into a book. With a few drafts under his belt and the enlistment of co-author Brooks, Chance began teaching a doctoral seminar on the subject, using a manuscript version of the book. He credits his students from finance and various STEM fields for helping to improve the content, which led to the final product.

Foundations of the Pricing of Financial Derivatives: Theory and Analysis draws on the authors’ extensive combined experience teaching on the subject and in more mainstream finance subjects. The book’s content effectively balances fine-grained quantitative detail and a high-level theoretical overview. Within the book, the authors provide the necessary mathematical foundations to understand and excel in this highly technical subfield, grounding students in a careful new way of thinking where the Black-Scholes-Merton model is more than just a rote formula, and the concept of arbitrage is explained in a detailed fashion.

Rather than assuming the reader already has a deep mathematical understanding of the concepts explained, the book offers the required math foundation alongside its lessons, bringing master’s and doctoral students along even if they have no background in a highly technical field. It fills the gap between master’s-level financial derivatives textbooks and texts that target mathematically trained graduate students. 

“ The math level of the book starts off low but ends up high. For example, we assume the reader has taken some basic calculus but has probably forgotten most of it. Same with probability theory. So, we begin by providing a review before getting into new material. We do not claim to turn the reader into a quant overnight, but we think this book is a valuable set of early steps, said Chance. ”

For more information on Foundations of the Pricing of Financial Derivatives: Theory and Analysis, and to buy the book, visit

Amazon    or      wiley

Don M. Chance, Ph.D., CFA, holds the Norman V. Kinsey Distinguished Chair in Finance at the E. J. Ourso College of Business at Louisiana State University. He previously held the William H. Wright, Jr. Endowed Chair for Financial Services and the James C. Flores Endowed Chair for MBA Studies at LSU, and the First Union Professorship in Financial Risk Management at Virginia Tech. Prior to his academic career, he worked for a large southeastern bank. Professor Chance has had numerous articles published in academic and practitioner journals and has authored four other books: An Introduction to Derivatives and Risk Management (10th ed.), co-authored with Robert Brooks; Financial Risk Management:  An End User Perspective, Essays in Derivatives: Risk Transfer Tools and Topics Made Easy (2nd ed.), and Analysis of Derivatives for the CFA Program. 

He is often quoted in the media on matters related to derivatives and risk management, as well as financial markets and the economy in general. Lastly, he has extensive experience conducting professional training programs, and his consulting practice (Omega Risk Advisors, LLC) serves companies, organizations, and law firms.