Course description
Energy and Commodity Derivatives
The Energy and Commodity Derivatives course provides participants with an in-depth review of the range of energy and commodity derivatives available, an understanding of how these derivatives are priced, and expertise in applying these products in the real world.
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Upcoming start dates
Choose between 2 start dates
Suitability - Who should attend?
Who Should Attend
Anyone working in the commodity or energy markets.
Prerequisites
None
Outcome / Qualification etc.
CPD: 14 hours
Learning Outcomes
By attending this course, you will:
- Explore the wide range of energy and commodity derivatives
- Gain an intuitive understanding of forward curves, and how they influence the pricing of energy and commodity derivatives
- Recognise the meaning of volatility and how it affects option prices
- Compare energy and commodity derivatives markets with financial derivatives
- Examine the practical applications of derivatives and their use by clients
- Consider the needs and perspectives of clients
- Develop proactive and innovative strategies using energy and commodity derivative products that add real value
- Gain hands-on experience of energy and commodity derivatives and their use in various structures
Training Course Content
Introduction
- The energy and commodity markets
- Key features of the markets
- Supply and demand
- Oil, gas, and electricity markets
- Commodity markets
- Market participants
- Types of transaction
- Trade motivations
- Comparison with financial markets
- Dynamics of trading in the energy and commodity markets
Forward Pricing and the Forward Curve
- Time, cash, and energy flow diagrams
- Link between spot and forward prices
- Arbitrage-free pricing
- The forward price curve
- Contango and backwardation
- Seasonality
- Energy and commodity price curves
- Theory vs. practice in the markets
- Supply and demand
- The convenience yield
- Cost and risk adjustments to spot prices
- 💻 Constructing a forward price curve
Energy and Commodity Futures
- Contract definitions
- Examples of futures prices
- Trading features
- Standardisation of contracts
- Physical delivery vs. cash settlement
- Margins
- Advantages and uses for futures
- Hedging
- Basis and convergence
- 💻 Using energy futures to hedge
Energy and Commodity Swaps
- Definitions and terminology
- Cash flows and timings for swaps
- Quotation conventions
- Indexing the floating rate
- Energy swap applications
- Fixed-floating swaps
- Basis swaps
- Multi-fuel swaps
- Swing swaps
- Spread swaps
- Embedded swaps
- 💻 Hedging with energy swaps
- Swap pricing principles
- Pricing off-market swaps
- Cancelling or reversing a swap
- Releasing value from existing trades
- 💻 Swap pricing workshop
Energy and Commodity Options
- Options definitions and terminology
- Value and profit profiles
- Comparison of OTC vs. exchange-traded products
- 💻 An intuitive insight into option pricing
- American options and early-exercise
- Volatility – historical, implied experienced
- Volatility smiles and skews
- Option Greeks
Combining Options
- Horizontal, vertical, and diagonal spreads
- Straddles and strangles
- Ratio spreads and backspreads
- Strips of options – caps and floors
- 💻 Designing your own structure – a fluent transition between payoff diagrams and component parts
Hedging Structures Using Options
- Protective puts and calls / caps and floors
- Price enhancement strategies
- Selling options within a hedging program
- Collars, spreads, and participations
- Reduced-cost and zero-cost structures
- 💻Hedging customer energy exposure
Swaptions
- Swaptions – calls and puts
- Combining swaptions with swaps
- Extendable and cancellable swaps
- Embedding swaptions
- 💻 Pricing a cancellable swap
Energy Derivatives Strategies that Work
- Identifying and quantifying energy risk
- Spotting opportunities
- Establishing client objectives – what does the client really want?
- Determining client preferences, pain thresholds, and view
- Tailoring the structure to match the need
- Designing innovative and pro-active solutions
- Cross-product ideas
- Communicating with the client
- 💻 Energy risk hedging case
Why choose ACF Academy
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Expenses
- London: £1,825 (plus VAT)
- New York: $2,300
- Virtual: £1,575 (plus VAT)
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