Introduction to Commodity Futures & Options

This intensive 1-day course is aimed at delegates with little or no existing knowledge of commodity derivatives. The morning session focuses upon futures with the afternoon session focussed on options. The speakers are experienced traders and are thus able to offer real-world insight to the derivatives markets.

Course Information

Price £750 + VAT
Duration 1 day
Location London
Available Dates

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

Morning Session

  • Commodity derivatives fundamentals

- Derivatives - what are they and how did they evolve?

- Types of derivative - futures, swaps, options

- Key features of cocoa, coffee, sugar, energy and grains contracts

- Contract specifications - understanding standardisation, liquidity

- Futures Exchanges: locations, products, strengths and weaknesses

  • Logistics, terminology and mechanics of the futures markets

- Key language - 'long', 'short', 'margin', 'order book', 'clearing'

- Demonstration of a futures trading screen - ICE Connect

- Understanding bids, offers, depth-of-market, order entry

- The clearing system (CCP): marking-to-market, margin, cash-flows

  • Using futures

- Hedging - practical examples and case study

- Speculation - flexibility and gearing

- Settlement and delivery - in-store, ex-store, FOB

  • Futures pricing

- Where do futures prices come from?

- 'Fair value' and cost of carry

- Carry ('contango') and 'backwardation' - trading the curve

- Calendar spread trading: background, methodology and execution

  • Data and statistics

- Volumes and Open Interest

- Gaining intelligence from the data

  • Course conclusion

- Glossary

- Q&A session

Afternoon Session

  • Option fundamentals

- Option classes - calls and puts

- Everyday examples of optionality

- Key option features - rights and obligations

- Formal definitions

- Contract specifications

- Exercise and assignment - proactive vs reactive

  • Using options

- Options evolution

- Hedging with options - gaining protection and opportunity

- Speculating with options

  • Key option terminology

- 'Money-ness' - in/at/out of the money

  • Option pricing

- Key option pricing factors - underlying price, time and volatility

- Examination of volatility - the key to option pricing

  • Basic option strategy

- Long options versus short options

- Risk/reward dynamics

- Option pay-off graphs

  • Course conclusion

- Further resources

- Glossary

- Q&A session