Commodities investing: cash and derivatives markets

Negotiate and invest in commodities

  2 days
Course objectives

  • Understand commodity derivatives and financial markets based on the physical underlying markets

  • Acquire the skills to use commodity derivatives

  • Learn how to think about and invest in commodity markets

Course content

Introduction: Are commodities a liquid and transparent investment?

  • Price movements and regulations: Who controls the commodity markets?
  • Commodities and the US Dollar
  • Cash and derivative markets: a look at the similarities and differences in various commodities

Case Study: Analysis of market quotes, price levels, and volumes

Energy Markets: oil, gas, power, coal

  • Basics of physical oil: exploration, production, refining
  • Natural gas: system constraints and networks
  • Electricity: generation and regional markets
  • Coal: the future of the most polluting energy source

Transport and storage of energy

Components and behaviour of energy prices: What makes prices move?

  • Price bases: physical markets and financial markets
  • Tenure: can we predict prices?

Who are the major players in energy? And what is their influence?

  • Producers, refiners, and generators
  • Consumers, traders, and investors

Case Study: Analyse and predict price movements.

What can the past tell us about prices?

Commodity futures indices:

  • How are futures markets set up? And how do they work?
  • Major commodity indices

Case Study: A look at Intercontinental Exchange

Saxo Bank simulation

Commodity derivatives: Forwards, Futures, Swaps, and Options

  • Forwards: a dying breed?
  • Futures markets:
    • Futures and physical: spreads and basis risk
    • Market price structure: Backwardation and Contango
    • Typical strategies for the major players: producers, consumers, traders and investors
  • Swaps: over the counter derivatives
    • Definition and pricing: index and publication based swaps
    • Swaps in oil, gas and power
  • Options: the tricky derivatives
    • Fundamentals of options and option pricing: a very basic view
    • Option strategies and structures

Case Study: Define and discuss hedging and speculative uses of derivatives for a variety of objectives.




Christopher Heilpern

Christopher Heilpern

Energy products specialist, Christopher has gained extensive experience in commodities markets by exercising for almost twenty years, both on physics and derivatives in Europe and Asia.