"Derivatives II" is an advanced course which focuses on derivatives (such as options, forwards, futures, swaps, etc.) pricing and hedging issues. We present cutting edge valuation methods used by financial institutions to price derivatives and to manage risks involved in derivatives positions. After reviewing the fundamental valuation principles for contingent claims, we address the following issues: Derivatives replication techniques, semi-explicit methods for valuing American options, derivatives valuation with stochastic interest rates, numerical methods, volatility modelling, jump-diffusion models, and credit risk (vulnerable options, credit derivatives).