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Introduction to Commodity Futures & Options

ICE Education
Course summary
1 day
750 GBP excl. VAT
English
London
Next available date: 23/11/2020 - London
Professional Training

Course description

Introduction to Commodity Futures and Options

This intensive 1-day course is aimed at participants 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.

Suitability - 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.

Training 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

About provider

Intercontinental Exchange

Intercontinental Exchange - Open Courses in Commodities and Financial Markets

Intercontinental Exchange's diverse markets span futures and options on interest rates, commodities, indexes and FX, as well as equities and equity options. These markets are relied upon by international market participants, along with our post-trade infrastructure. ICE is uniquely positioned...


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Contact info

ICE Education

5th Floor, Milton Gate, Chiswell Street
EC1Y 4SA London

 Show phone number
www.theice.com

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