Fundamentals of Structure Energy Products

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How to analyze, structure, price, trade and market energy products to take advantage of a dynamic pricing environment in natural gas and electric power markets

Course Description The course is aimed at teaching some of the most popular, productive, and practical structures used in the energy markets and assumes that participants have only a preliminary level of familiarity with concepts and products such as swaps and options e.g. calls and puts. An active participant in today's energy markets, the instructor presents a detailed picture of common transactions and goes into actual calculations and examples.  The instructor will teach not only how to price these structures but will also demonstrate how to trade or present and market these concepts, ideas and products to clients and counter parties. This course is specially designed for marketers, structurers, commodity traders, analysts, and those who are interested in learning about energy commodity transactions. Topics to be covered: Volatility and Forward Curve behavior: Importance of volatility and its impact on premiums will be explored and explained in detail. Forward curve and its behavior over time will be explained via several examples.  Behavior of consumers and producers of energy will be studied under various pricing environments as a result of changes in forward curve. Collars Benefits of a collar. When to offer collars, construction of minimum and maximum thresholds, and how to market them will be discussed in detail. Extendables Advantages of extendable and how to structure and present it to clients. Blend and Extend The difference between an extendable and a "blend and extend" will be presented, and how to structure and market this product will be demonstrated in detail. Convertibles A challenging product but very popular among clients. Pre-Pay Swaps Excellent product for long-term and large $ value transactions.  Usually is transacted with clients with superior credit rating.  Involves exploiting an imbedded interest rate spread. Tolling / Spark Spreads Very popular with companies that are aiming at going long generation. Heat Rate Options New structures employing heat rates are proliferating. Savvy companies are increasingly interested in these structures. Swaps with Imbedded Loans An aggressive product requiring credit management. An excellent way to increase or capture market share, albeit requiring quite a bit of risk management. Partial Month Options Highly illiquid instruments and difficult to hedge.  Yet very effective.