Commodity Options Part 1

This course is aimed at delegates with little or no existing knowledge of commodity options. These sessions are led by experienced traders and trainers who engage to bring theory to life through real-world insight to the options markets.The aim of this program is to provide you with the basic concepts and tools of the options markets. We draw on markets representative for all delegates to ensure relevance to every situation.


This course is comprised of three parts:
1. Pre-course: Access to the ICE Education learning platform for on-demand primer content.
2. Classroom based Sessions: These are short focused sessions with practical activity and interaction throughout.
3. Post-course: On-demand content remains available and an optional live video clinic session is scheduled for one week post course for any learning points you'd like to revisit.

Course Information

Price £795 + VAT
Duration 1 day
Location London
Available Dates
Jun 21 2022  Register Now
Nov 22 2022  Register Now

Who Should Attend

  • New traders and brokers
  • New entrants to the futures and options markets
  • Support and operations people involved in the commodity markets
  • Sales and marketing personnel
  • Individuals working in organisations such as: trading companies, banks, brokers, commodity producers, consumers, refiners, distribution companies, government and associated organisations.

Booking Information

Tel: +44 (0) 20 7065 7706

Course Content

Session 1 - Option Fundamentals

  • Introductions
  • Course structure & agenda
  • Option fundamentals

o Option classes: calls & puts

o Definitions & key features

o Relevant examples

o Contract specs

  • Trade venue: ETO vs OTC
  • Q&A session
  • Exercises

o Delegates to access various exchange websites and answer questions about relevant (to delegates) option contracts

o Finding settlement prices

Session 2 - Fundamentals continued

  • Explanation of sample option pricing screens

o Key point: inter-relationships of option prices

o Trading options vs trading futures

  • Exercise & assignment

o Definitions

o Examples

o Contract specs revisited

o European-style vs American-style

  • Option fundamentals: summary
  • Q&A session
  • Exercises

o Exercise and assignment

Session 3 - Using Options

  • Evolution of options & option markets
  • Option Uses - An introduction:

o Hedging - price protection

o Speculation

o Arbitrage - option market making

  • Using options to hedge - detail

o Key language - natural longs & shorts

o Detailed case study - natural short

  • Hedging with futures - limitations

" Hedging by buying options - problems

  • Hedging with "collars"

o Creating a hedging decision tree

  • Q&A session
  • Exercises

o Delegates work collaboratively to address a case study of a natural long

Session 4 - Hedging contd. & Speculation

  • Run through hedging case study exercise
  • Hedging with options: summary
  • Using options to speculate

o Long options:

  • Advantages of long options over futures
  • Speculative time-frames

o Short options:

  • Why sell options?
  • Case study - a warning!
  • Speculating with options: summary
  • Q&A session
  • Exercises

o Risk reward- futures vs options

Session 5 - Basic option strategy

  • Planning option strategy

o The option trading decision

o Long options vs short options

  • " Expiry pay-off charts

o Long call

o Short call

o Long put

o Short put

  • Speculative decision tree
  • Q&A session
  • Exercises

o Creating pay-off charts

Session 6 - Introducing option price & value

  • Key language - money-ness

o At-the-money

o In-the-money

o Out-of-the-money

  • " Option pricing

o Historical context

o Methodology - Black Scholes

  • Option pricing models

o Underlying

o Time

o Interest rates

o Volatility

  • Q&A on this session
  • Summary/round-up of day
  • Exposition of digital post-course resources inc. assessment of day material
  • Final Q&A