Commodity Markets
Overview:
Introduction:
This training program provides a thorough overview of commodity products, trading strategies, and financing methods. This program equips individuals to navigate commodity markets successfully and optimize trading outcomes.
Program Objectives:
At the end of this program, participants will be able to:
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Review and fully comprehend the methods and processes used in the cash market.
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Gain knowledge of the regulatory frameworks
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Describe how risk is managed using derivatives and structured products.
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Describe the workings of several related derivative products as well as collateralization requirements and problems.
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Understand intuitively the pricing, hedging, and other problems related to derivative products.
Targeted Audience:
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Managers of corporate risks.
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Dealers, Brokers, and Traders.
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Asset Managers.
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Managers of Sales Compliance.
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Portfolio Directors.
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Audit.
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Employees in accounting and finance departments.
Program Outline:
Unit 1:
Commodity Market Structure and the Corporate Risk Environment:
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Corporate operations and the role of commodity risk.
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Commodity market categories.
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The unique nature of physical vs financial assets.
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Market characteristics: Exchange traded vs OTC.
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Price discovery and market transparency.
Unit 2:
Market Participants:
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Ags, Energies and Metals – who are the participants.
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Speculators, hedgers and investors.
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More detail on energy markets – products, suppliers and consumers.
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More detail on Metal markets – products, suppliers and consumers.
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More detail on Ag markets – products, suppliers and consumers.
Unit 3:
Primer on Derivatives: Linear Products:
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The role volatility, black swans and market blow-ups.
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Pricing forwards and futures.
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The cost of carry model.
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Mean reversion in commodity pricing.
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Hedging and risk reduction.
Unit 4:
Option Trading II:
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How option prices change.
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American vs. European options.
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Option spread trading – money spread and calendar spread.
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Taxonomy of option trading methods.
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Trading strategies involving two options.
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Trading strategies with three or more options.
Unit 5:
Adjusting risk exposure with option trades:
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Understanding risk exposure and its significance in trading decisions.
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Identifying strategies to manage risk through option trades.
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Hedging techniques using options to mitigate downside risk.
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Adjusting risk exposure dynamically based on market conditions and portfolio objectives.
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Evaluating the effectiveness of option trades in achieving risk management goals.