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Fundamentals of Energy and Electricity Trading and Hedging

Presented in partnership with: PGS_Logo

This proven program is for 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.

Includes a discussion of the major market changes that are occurring as the result of the Dodd-Frank Act and the CME-ICE decision to list many of their OTC swaps as energy swap futures contracts. 

What you will learn: 

  • 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.

Topics include:

  • 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.

Instructor

John Adamiak

President and Founder
PGS Energy Training

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.

Fundamentals of Energy and Electricity Trading and Hedging Agenda

TIME
THURSDAY, April 6th
7:45 am
Continental Breakfast Opens:
8:00 am
Morning Session:
  • • 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.
12:00 pm
Lunch:
1:00 pm
Afternoon Session:
  • • 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.
4:30 pm
Day One Ends:
TIME
FRIDAY, April 7th
7:45 am
Continental Breakfast Opens:
8:00 am
Program Begins:
  • • 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.
1:30 pm
Program Ends:
More

Ticket Info

Early Bird Rate - $1,789
(expires on May 17)

Registration Fee - $1,889

Register

Event location

NYC Torch Club (NYU Campus)
18 Waverly Place
New York, NY
+1 (212) 998-6724

Because of the diversity of hotels found in the area, PGS Energy Training will not be holding a block of sleeping rooms with one particular hotel. Should you need a list of local hotels in the area, please contact us at (440) 853-1038 and we can help you with your accommodations.

FAQs


Who attends?

Among those who will benefit from this seminar 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 program include energy producers and marketers; utilities; banks & financial houses; industrial companies; accounting, consulting & law firms; municipal utilities; government regulators and electric generators.

Any prerequisites?

This fundamental level, group-live seminar has no prerequisites. No advance preparation is required before the seminar.

What is the dress code?

Casual.

What is the cancellation policy?

Cancellations for this program are eligible for a full refund, less a $150.00 administrative fee, if received at least 15 business days prior to the start of the program. Cancellations received after that date but at least 5 business days prior to the start of the program receive a credit in the amount of the registration fee, less a $150.00 administrative fee, to attend another Knowledge Center program within 13 months. Cancellations received fewer than 5 business days prior to the start of the program are not eligible for a refund or credit. 

Attendee substitutions from the same company may be made at any time.

In the event of a cancellation from a group discount, refunds or credits are issued beginning with the most heavily discounted price, minus a $150.00 administration fee.

"No shows" - or those who cancel within 15 days of the program - and have registered under the Invoice option, remain liable for the full program fee.

The Knowledge Center reserves the right to cancel/change programs, content, speakers or venue at any time. the Knowledge Center reserves the right to make portions of the program registration information available to program sponsors. the Knowledge Center will not be held liable for any costs incurred by registrant due to individual registration cancellation. In the event that a seminar is cancelled due to inclement weather, faculty cancellation or force majeure, the Knowledge Center will refund the registrant's tuition in full, however the Knowledge Center will not be liable for incidental or consequential out of pocket expenses incurred by the registrant. If you have questions regarding the Knowledge Center's refund, complaint or program cancellation policy, please call us at (434) 951-7786.

Registrant, as an individual person attending a Knowledge Center conference, seminar, or other program, hereby grants permission to the Knowledge Center to use and publish his or her image, likeness, or testimonials collected in connection with the program for advertising and trade purposes in connection with the Knowledge Center’s conferences, instructional, and/or marketing activities.

Continuing Education Credits

13.5 Hours
This live group seminar is eligible for 13.5 CPE credits. Be aware that state boards of accountancy have final authority on the acceptance of individual courses for CPE credit. PGS Energy Training is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 Fourth Avenue North, Suite 700, Nashville, TN, 37219-2417. Web site: www.nasba.org. CPAs interested in attending any seminars should contact our offices for details on CPE credits granted and any prerequisite requirements. PGS telephone seminars are eligible for CPE credits only if seminar participants use the printed seminar slides - not the Internet posted slides.
13.5 Hours
PGS Energy Training is registered with GARP as an Approved Provider of continuing professional education (CPE) credits. PGS Energy Training has determined that this program qualifies for 13.5 credit hours. If you are a GARP CPE participant, please record this activity in your Credit Tracker at www.garp.org/cpe. Please inform PGS Energy Training that you are a GARP CPE participant upon seminar registration. The Global Association of Risk Professionals (GARP) is a not-for-profit membership association dedicated to preparing professionals and organizations for making better-informed risk decisions. GARP's membership represents more than 150,000 risk management practitioners and researchers at academic institutions, banks, corporations, government agencies, and investment management firms in 195 countries and territories. GARP administers the Financial Risk Manager (FRM) and Energy Risk Professional (ERP) exam certifications recognized by risk professionals worldwide. Visit www.garp.org/cpe.