In-Depth Seminar: Energy/Electricity Futures, Options, and Derivatives
Comprehensive 2 day on-demand seminar with Live Q&A
(30 day access)
How this online course works
This proven online training program is for energy and electric power professionals who are looking for a comprehensive and clearly explained understanding of natural gas, oil and electricity financial instruments, the markets they trade in, and how these powerful tools can be used to manage risk and structure profitable transactions.
This online course features the same material used in the popular PGS in-person classroom seminar. Register today and join the over 10,000 industry professionals who trust PGS for their energy training needs.
Session 1: Introduction to Energy & Electricity Commodity Markets
71 minutes - Available Now.
What You Will Learn
- The structure, function and terminology of spot, cash, and forward natural gas, oil, and electricity commodity markets, and what energy derivatives are.
- The three different types of forward energy markets (futures, financial over-the-counter & physical) and how these markets relate to each other including the differences between physical and financial natural gas and power.
- An overview of the large and private ICE OTC over-the-counter electronic energy market and the importance of liquidity.
- How forward financial markets reduce risk and add value for energy consumers, producers and electric generators.
- An overview of the large and private ICE OTC over-the-counter electronic trading platform, the importance of liquidity, and what "clearing a trade" means with the CME Clearinghouse and ICE CLEAR.
- The difference between brokers, FCMs, traders, dealers, market-makers, marketers, power marketers, and wholesale energy merchants, and how they make their money.
- The meaning of "bid/offer spread" and other transaction terminology.
- The difference between price and "basis" risk.
- Why the hedging needs of energy producers and end-use consumers are different from those of energy marketers, oil refiners and gas/coal fired electric generators.
- The difference between price and spread hedgers.
- What liquidity risk is, and why it is a critical issue for energy markets and traders.
- The structure, function and terminology of spot, cash & forward natural gas, oil and electricity markets, and what energy derivatives are.
Session 2: Energy/Electricity Futures Contracts and the CME, ICE, and Nodal Exchanges
86 minutes - Available Now.
What You Will Learn
- The difference between physical and cash settled energy futures contracts and why the same financial instrument can have ten different names.
- Why the futures market is a game of virtual promises, how futures trading adds value to the industry, why trading is a zero sum game, and why futures trades do not directly affect delivered physical volumes.
- A summary of energy futures contracts and how the CME-NYMEX and ICE Futures Exchanges operate.
- How the "ICE" and CME-Globex trading platforms work, and how trades are cleared through the CME Clearinghouse and ICECLEAR.
- How cash margining and your futures brokerage account works, and how cash management/funding risk can blow up even prudent hedges.
- What energy and electricity commodity swaps/cfds are, and how these instruments are similar to financial futures contracts.
- An overview of the large and private ICE OTC over-the-counter electronic energy market, the importance of liquidity, how the "ICE" and CME-Globex trading platforms work, and how trades are cleared through the CME Clearinghouse and ICECLEAR.
Session 3: How To Hedge Energy/Electricity Price and Basis Risk
156 minutes - Available Now.
What You Will Learn
- Why energy companies financially hedge.
- The difference between price hedgers and spread hedgers.
- How to create buyer and seller futures hedges with physically AND financially settled futures contracts and swaps.
- The many real-world issues that can impact futures hedging.
- What basis risk is, and how "basis blowout" can destroy a buyer's or seller's futures hedge.
- How to hedge energy and electricity price risk with powerful CME and ICE financial futures contracts.
- How to use a basis swap or financial futures contract to hedge natural gas and electricity locational basis risk.
- How to hedge both basis and delivery risk using trigger deals.
- What components make up the master hedging & trading equation, and what the difference is between financial and physical locational basis "fin" versus "phys".
- The basics of heat-rate-linked power transactions and why this technique is uch a powerful electricity risk management and deal structuring tool.
Session 4: Introduction to Energy & Electricity Options
90 minutes - Available Now.
What You Will Learn
- What energy and electricity options are and why they are so valuable.
- The meaning of "puts", "calls", "intrinsic value", "time value", "deep out-of-the-money" and other options-related terms.
- Why capacity payments, demand charges, and reservation charges are just another name for option premiums.
- The characteristics of the CME-NYMEX, over-the-counter, and physical options markets and how they differ from each other.
- The difference between American, European and Asian-style options.
- How CME-NYMEX-traded energy options are bought and sold.
- Why one should never "early exercise" an American-style CME-NYMEX or physical options.
- How to hedge price risk with energy option by creating price caps, floors & collars.
- How a buyer can create a price cap using CME-NYMEX call options (An example).
- The three trade-offs that must be considered when hedging with options.
- How buyers and sellers can create a "No Cost" price collar using CME-NYMEX options (An example).
Session 5: Introduction to Energy Trading and How to Trade Around Energy Assets
120 minutes - Available Now.
What You Will Learn
- Some common types of energy and electricity trading, why traders specialize, and the different ways energy traders can get an "edge" on the competition.
- What the rationale, concepts and mechanics are for asymmetrical payouts, basis trading, spread trading, and trading around assets.
- How different types of energy, electricity, and asset-based trading can be summarized in a single three dimensional graph.
- Why merchant energy and electric power assets such as firm transmission capacity, storage, processing, and generating plants are valuable call options on spreads, and how access to these assets gives energy traders a significant advantage.
- What asset “optionality” and "trading around assets" mean.
- What the terms "Contango" and "Backwardation" mean, and how the energy “carry trade” works.
- A simple rule that will guide your daily decision on whether to use or idle an asset such as firm transmission capacity, energy storage, gas processing, or natural gas/coal electric generating plants.
- A detailed example of how to hedge and trade around firm transmission capacity. This example can be easily adapted to optimizing the income of energy storage, processing, and electric generation assets.
Session 6: How Energy Marketers Make Money Buying Under-Priced Physical Options From Their Customers and Suppliers
135 minutes - Available Now.
What You Will Learn
- How an energy marketer can make over $100,000 of profit on a single transaction.
- A brief overview of puts, calls, and basic option terminology.
- What a cash-settled European-style "swing" option is, and how it works.
- How to calculate annualized volatility, and why there can be significart risk in the physical energy and electricity markets.
- Why energy/electricity buyers and sellers often undervalue energy options and leave money on the table through lost opportunity.
- How energy marketers can make money from commercial players who misprice risk.
- A detailed example of a structured energy transaction where an energy marketer creates a customer price cap, and why customer price caps can be difficult to sell.
- How an energy marketer can buy valuable put and call options at discounted prices from energy customers, producers, and electric generators.(Two detailed examples).
- The money-making possibilities of extendible transactions with a detailed example.
Who Should Attend
Among those who will benefit from this training program include energy and electric power executives; attorneys; government regulators; traders & trading support staff; marketing, sales, purchasing & risk management personnel; accountants & auditors; plant operators; engineers; and corporate planners.
Types of companies that typically attend this training program include energy producers and marketers; utilities; banks & financial houses; industrial companies; accounting, consulting & law firms; municipal utilities; government regulators and electric generators.
Prerequisites and Advance Preparation
This fundamental level online training program has no prerequisites. No advance preparation is required.
Why Choose PGS?
PGS training programs are known for their clear explanations and in-depth content. Register today, and join the over 10,000 industry professionals who trust PGS with their energy training needs.
President PGS Energy
John Adamiak is President and Founder of PGS Energy Training and an expert in energy derivatives and electric power markets. Mr. Adamiak is a well-known and highly effective seminar presenter who has over 20 years experience in the natural gas and electric power industries. His background includes 15 years as a seminar instructor, 9 years of energy transaction experience, and 6 years of strategic planning and venture capital activities. John's academic background includes an M.B.A. degree from Carnegie Mellon University.
On-Demand Access Time
The on-demand training presentations are available for a total of 30 days from the time any one of the training presentations is first viewed.
After 30 days, your access to the on-demand presentations will expire.
However the PDF formatted training program slides and other documents you receive are yours to keep.
This "bundled" course costs less per training hour and gives you many more days of access time compared with buying stand-alone courses.
2 day on-demand seminar with Live Q&A
Available Now. (30 day access)
$1,495 for the first attendee,
$1,275 for the second attendee,
and $995 for each attendee thereafter
Special pricing is available for groups of 10 or more. Please email or call (440) 853-1038.
Payment and Cancellations
Payment is required prior to
training program access. Payment can be made by Visa, Master Card, American Express, or corporate check. Your credit card will be charged at the time of registration unless other arrangements have been made.
Cancellations for online
training programs can be made before the program access instructions are sent by PGS, and cancellations will result in a credit. For more information on PGS policies regarding administrative matters and complaint resolution, please contact our offices at (440) 853-1038.