Energy Derivatives

LEVEL: INTRODUCTORY LEVEL

▪	Understand the dynamics of energy markets
▪	Hedge exposure with commodity derivatives
▪	Implement a dynamic risk management policy

▪	Characteristics, market conventions and uses of energy derivatives - Introductory
▪	Pricing elements of energy markets:
▪	spot-forward - Introductory
▪	Characteristics of exchange traded and OTC markets - Introductory
▪	Valuation and sensitivities of standard options - Introductory
▪	Energy swaps and options: risk management - Introductory

▪	Gain the fundamental knowledge to understand energy markets and their participants
▪	Understand the risks involved in order to optimise hedging capacities
▪	Structure standard options to implement
▪	complex tailor-made hedging tools
▪	Learn the essentials of book running
▪	(speculation and hedging)
▪	This course is not suitable for delegates
▪	who already master hedging strategies
▪	and in particular option strategies.

▪	Commodities/energy salespeople
▪	Dealing room support staff (middle and back office)
▪	Brokers
▪	Risk management
▪	Financial division
▪	Project finance
▪	Commodity producers
▪	Government bodies in charge of energy policies
▪	Consumers/buyers of commodities
▪	Institutional investors

ENERGY MARKETS
Introduction
▪	History of energy markets: oil, gas, electricity, CO2
▪	Structure of OTC and exchange-traded markets
▪	Market participants and their objectives
Determinants of market prices
▪	Spot references (e.g.: oil, gas, electricity, CO2)
▪	Elements that impact markets
▪	Forward prices (price formation, structures)
▪	Development and use of forward curves: inter-maturity spreads/inter-market spreads
▪	Exchange-traded instruments (examples and exercises)
OTC ENERGY DERIVATIVES
Derivatives (swaps, options, hedging strategies)
▪	Contract characteristics
▪	Components of pricing
▪	Sensitivities
▪	Uses
▪	Strategies (examples and uses)
▪	Practical workshop . Simulate customer hedging strategies
Theoretical Models
▪	Black & Scholes
▪	Volatility (notions and calculation)
▪	Practical workshop . Price options using Black & Scholes
Risk Management
▪	Mark-to-Market and Value At Risk
▪	Swap management
▪	Delta-neutral option management (examples)
▪	Practicalworkshop . Manage price risk for a customer (producer/consumer/refiner)