IN-PERSON CLASSROOM SEMINARS

• How to use futures contracts, options, swaps, trigger deals and EFPs to protect your company from natural gas, oil and electricity price risk.
• How physical and cash settled futures contracts, over-the-counter energy swaps, and physical forward contracts are traded.
• How the NYMEX futures & options markets operate, and how electronic marketplaces and electronic futures exchanges such as ICE, NYMEX CME Globex, and NYMEX Clearport Services work.
• How buyers and sellers can use natural gas futures and options to create price hedges, price caps, price floors, and "no-cost" collars to manage both natural gas and electricity price risk.
• What basis risk is and how basis and delivery risk can destroy your hedging program.
• How to structure profitable energy and electric power transactions without exposure to price risk, and what "trading around assets" means.
• A summary of industry clearing procedures and deal contract language.
• The difference between brokers, traders, dealers, market-makers, marketers and wholesale energy merchants.
• Why most energy and power traders prefer to execute hub-referenced transactions instead of doing point-to-point deals.
• How electricity futures and derivatives are impacting the forward electric power markets.

• How basis trading, volatility trading, structured transactions and EFPs work, and how over-the-counter energy dealers make markets.
• How heat-rate-linked power transactions can effectively convert natural gas futures, options, swaps and other financial instruments into electric power derivatives.
• The Master Energy Trading Equation and why trading energy is different from trading financial products and other commodities.
• The basics of energy and electricity options, the implications of high energy price volatility, and why energy and electric power assets are really options in disguise.
• How to hedge energy price risk with NYMEX options contracts.
• How to calculate annualized volatility, the fundamentals of pricing options and why the Black Scholes model doesn't work for pricing energy and electricity options.
• The put-call option parity equation, synthetic option positions, and how to delta hedge.

Day One

• Overview of energy & electric power forward markets, terminology, price risk and the basics of energy and electricity trading.
• Liquidity risk, funding risk, credit risk and a brief discussion of Mark-to-Market accounting.
• What futures contracts are, and why and how they evolved.
• How physically-settled energy futures contracts are traded on both the NYMEX trading floor and electronically through the new NYMEX CME Globex platform.
• How cash-settled energy futures contracts are electronically traded on the ICE Futures Exchange and why the crude oil futures contract has been wildly successful.
• How the NYMEX futures exchange & its new computer trading system operates.
• Futures-related account maintenance, margin deposits, clearing and cash management issues.
• How buyers and sellers hedge natural gas price risk with NYMEX futures contracts.
• How to hedge electricity price risk with NYMEX natural gas futures contracts.
• What basis is, and what the different types of price spreads are.
• What basis risk is, and how it can destroy your futures hedge.
• How traders "basis trade" and why it works.

Day Two

• The fundamentals of fixed-for-floating swaps, basis swaps, exchange indexed swaps, and contracts-for-differences.
• How over-the-counter dealers and institutional energy brokers operate.
• How electronic marketplaces such as ICE and NYMEX's Clearport Services work, how an Internet marketplace differs from an Internet futures exchange, who the CFTC and the United Kingdom's FSA regulates, and why these issues are important.
• The difference between financial and physical basis ("fin" and phys").
• Why so many industry participants use trigger deals.
• What EFP's are, and how and why this powerful tool is used by sophisticated traders.
• How the wholesale energy trading equation is defined, and what its implications are.
• How this equation underlies the structure of energy trading books.
• Puts and calls / Basic option terminology and concepts.
• The difference between exchange-traded, over-the-counter and physical energy options.
• What American, European and Asian style options are.How to create price caps and collars with exchange-traded options.
• How to calculate annualized volatility and why the BSM does not accurately price energy and electricity options.
• What the option Greeks are, and the basic concept of delta hedging.
• How to buy and sell volatility.
• Two examples of structured energy transactions.

This live group seminar is eligible for 12.0 CPE credits. Be aware that state boards of accountancy have final authority on the acceptance of individual courses for CPE credit. As of January 1, 2002, sponsored learning activities are measured by program length, with one 50-minute period equal to one CPE credit. One-half CPE credit increments (equal to 25 minutes) are permitted after the first credit has been earned in a given learning activity. You may want to verify that the state board from which your participants will be receiving credit accept one-half credits.