Trading OTC Derivatives: Options and Linear Instruments

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This two-day program will give you a comprehensive understanding of the various strategies employed in the world of over-the-counter derivatives. The course is designed to help management, traders, risk managers and back office personnel in the energy industry gain a thorough understanding of what OTC financial instruments are, when they should be employed and how they can be successfully managed.

What You Will Learn

Topics covered include:

  • What OTC derivatives are and how these instruments are used in the energy industry.
  • When to use various linear and non-linear OTC derivatives.
  • How to price linear and non-linear OTC derivatives.
  • Weather derivatives.
  • Types of basis risk, how basis is calculated and how to decide if basis risk should be hedged.
  • What basis swaps are and when they should be used.
  • Optionality risk & the Greeks (delta, gamma, vega, theta & rho).
  • Historical & implied volatility (including volatility smiles).
  • Option pricing models.
  • Volumetric vs. delta hedging.
  • Directional, volatility and synthetic option spread strategies.
  • Option exercise styles.
  • Exotic options.
  • Forward curves, backwardation and contango markets.
  • Matching hedge strategy to price and volatility forecasts.
  • Extendable and cancelable swaps.
  • Swaptions.
  • Costless collars.
  • Bull call and Bear put spreads.
  • Financed & ratio spreads and backspreads.
  • Christmas trees.
  • Time spreads (Calendars and Jelly Rolls).
  • Spread, compound, average priced, one-touch, digital, swing, embedded swing and look-back options.
  • Double barriers and double barrier boxes.

Who Should Attend

This course is applicable to all levels of the energy infrastructure, oil, natural gas, electricity and coal. Individuals in every functional area of responsibility in all energy industries whose decisions have significant financial impact will benefit from this program. Managers from areas such as trading, risk management, compliance, human resources, credit, contracts, operations, marketing, sales, supply and distribution, purchasing, financial and accounting will find the course highly beneficial.