Energy and Commodity Derivatives

  Intermediate CPD: 14 hours   4 half-days   Virtual


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.

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

Who Should Attend

Anyone working in the commodity or energy markets.



Seminar Content

  • 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
  • computer 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
  • computer 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
  • computer Hedging with energy swaps
  • Swap pricing principles
  • Pricing off-market swaps
  • Cancelling or reversing a swap
  • Releasing value from existing trades
  • computer Swap pricing workshop
Energy and Commodity Options
  • Options definitions and terminology
  • Value and profit profiles
  • Comparison of OTC vs. exchange-traded products
  • computer 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
  • computer 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
  • computer Hedging customer energy exposure
  • Swaptions – calls and puts
  • Combining swaptions with swaps
  • Extendable and cancellable swaps
  • Embedding swaptions
  • computer 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
  • computer Energy risk hedging case
Virtual Learning

When and Where
   22 Jul 2024 - 25 Jul 2024
   a.m. sessions – 08:00 to 12:00 (for Asia / EMEA participants)
   p.m. sessions – 13:00 to 17:00 (for EMEA / Americas participants)
   All times are GMT (London time)

Other Dates and Locations
Search for Energy and Commodity Derivatives in our course schedule for alternative dates and locations where this course is offered.

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