Theoretical knowledge on Derivative

[Deo]

Hello Everyone, I am a new member here. I was looking for a good reference material on the Theoretical side of Derivatives. I was able to locate the ones below from the recommended reading list. Can someone point me to the first book I should try to understand: from Theoretical point of view. Thank you very much for your help.
Deo

• An Introduction to the Mathematics of Financial Derivatives, Second Edition by Salih Neftci
• Options, Futures, and Other Derivatives (8th Edition) by John Hull
• The Mathematics of Financial Derivatives: A Student Introduction by Paul Wilmott

 

[roni]

Hull's book is not quant oriented but it's the standard in the market at least in not very quantitative areas...
It will help you understand what different instruments are and how they are priced.
But to know the real math behind them I guess you will need a different book.
I glanced at Salih's book once and it seemed to be fine though I'm not sure if it's for beginners... I think it's more on the math side (correct me if I'm wrong).
What's your background?

 

[Deo]

Hello Roni,
Thanks for your help.
I have some understanding of Options and have some knowledge of Maths that may be needed. I will be ok with a non-beginner book as long as it spend more time on theory.
Deo

 

[quotes]

Salih's book is a fine introduction. Its math is simpler than Shreve's.
Besides, it proves maths problem friendly for beginners.

 

[Adrián Facchi]

If by theoretical knowledge you mean mathematical modelling then the most theoretical book that you can find is "Musiela&Rutkowski - Martingale Methods in Financial modelling". This book takes the topic as an application of the Stochastic Calculus from a strictly formal point of view. The required mathematical background is quite high as you are supposed to know (or to understand) the formal formulation of the Stochastic Calculus for example.

A little bit more accessible is "Tomas Björk - Arbitrage Theory in Continuous Time" (still quite formal though) I don't like it that much.

"Sheldom Ross - Introduction to Mathematical Finance" is very basic and anyone should be able to read it.
"Jan Hurt - Stochastic Modelling in Economics and Finance" still quite basic.
"Steven Shreve - Stochastic Calculus and Finance" is more advanced but not as hard as Musiela&Rutkowski or Björk.