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Commodity Options Part 1: CLASSROOM

Course Information

Price£975.00 + VAT
Duration1 day
LocationLondon
Available Dates
February 17, 2025Register Now
May 12, 2025Register Now
September 08, 2025Register Now
November 17, 2025Register 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