Fundamentals of Trading Energy Futures & Options
$9.99
| Author(s) | , |
|---|---|
| Format |
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| Pages |
261 |
| Published Date |
2002 |
In Fundamentals of Trading Energy Futures & Options, authors Errera and Brown explain how exchange traded futures and options markets work, and how companies can successfully use the markets in their overall strategy to increase profitability. They cover everything from market mechanics, hedging, spread trading, and technical trading to history and growth of the markets. Also included is an extensive appendix detailing contract specifications for 13 energy futures/options contracts.
Introduction:
Trading in energy futures and options contracts is changing the manner in which energy related firms operate. Although agricultural commodity futures contracts have been trading for well over 120 years, the first successful energy futures contract was introduced in 1978. It was a contract that called for the delivery of heating oil. Since that initial success, energy-related futures and options contracts have achieved steady growth. In addition to heating oil, natural gas, crude oil, gasoline, propane, gas oil, and electricity contracts are trading.
The success of energy futures and options contracts is not surprising since futures markets present many opportunities to reduce risk and enhance profitability. A solid understanding of how energy futures and options markets work, and how energy futures and options contracts may be used in the energy business, will pay large dividends to those firms willing to invest the time and energy necessary to master these techniques.
The purpose of this book is to explain the fundamentals of energy futures and options markets in a manner that is both correct and understandable. Unfortunately, there is a large amount of misinformation concerning these markets, which is routinely accepted as gospel. In addition to providing a solid grounding in futures and options markets, it is our goal to dispel some of these myths.
Throughout the book we use energy futures market-related examples. However, virtually all of the information presented generalizes readily to all futures and options contracts and markets. In chapter 1 we present an overview of energy futures and options contracts and markets. Chapter 2 is entitled “Market Mechanics” and presents much useful information on the operation of energy futures markets. Chapter 3 covers the behavior of futures contract prices and the very important relationships between cash and futures prices. Chapter 4 covers speculation and techniques of profiting on relative price changes by using spreads.
Perhaps the most useful information in the book is contained in chapter 5, which covers hedging techniques. Hedging is the primary way that energy-related firms may benefit from futures markets. Hedging techniques are risk-reducing techniques that also offer the potential to increase profits. Chapter 6 introduces the concepts of options on futures contracts and chapter 7 explains various energy options strategies. Chapter 8 briefly covers technical analysis and chapter 9 covers the history and growth of energy futures and options markets. Finally, chapter 10 covers the benefits of futures and options in general and looks into the future of energy futures markets with a discussion of how such markets will impact on energy-related firms and the general public.
In addition to the above materials, we present a summary of the rules of the most active energy futures and options contracts. These include heating oil, crude oil, natural gas, unleaded gasoline, propane, coal, Palo Verde electricity, California–Oregon Border electricity, Cinergy electricity and Entergy electricity contracts traded on the New York Mercantile Exchange; and gas oil, Brent crude oil and natural gas contracts traded on the International Petroleum Exchange. A comprehensive glossary of commodity futures and energy industry terms is also included.
Contents:
- Futures and Options Contracts and Markets
- Market Mechanics
- Behavior of Commodity Futures Prices
- Speculation and Spread Trading
- Hedging
- Introduction to Options on Futures
- Energy Options Strategies
- Technical Factors
- History and Growth
- Economic Implications of Energy Futures and Options
Fundamentals of Trading Energy Futures & Options By Steven Errera, Stewart Brown pdf
18 reviews for Fundamentals of Trading Energy Futures & Options
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Colter Reese (verified owner) –
Mr Errera and Mr Brown are drowing a clear picture of energy futures markets. Many complex subjects are turned into a readable and comprehensible form. In my opinion, this book sould be your own book!
Jude Wang (verified owner) –
This is a superb book for anyone who wants to learn more about futures and options, especially with specific examples to energry trading. It is quite easy to read and very understandable for anyone untrained in finance jargon.
Florence Wong (verified owner) –
The Fundamentals of Trading Energy Futures & Options was one the best business books I’ve read. It was easy to read and understand. The book is well written and earned its cost in my first hour of trading. I highly recommend this book.
Faye Guzman (verified owner) –
The main feature of the book to me was that I understood it! I attempted other books before, and failed. The subject is not hard, but the exposition needs to be clear, and with Errera and Brown it is. I can now read the Gas Daily, and I am ready for the next book on the subject (which is, of course, Hull’s “Options, Futures…”). Thanks to the authors for the good book.
Frankie Alvarado (verified owner) –
The concepts and trading strategies of futures and options are well explained in plain English. Unfortunately, the author only scatterly discussed some characteristics of the energy industry. To be a successful trader in the energy futures market, you must be an expert in the industry first. However, this might be beyond the scope of the book.
Andres Cordova (verified owner) –
If you’re looking for a book to teach the basics of trading options and futures, this one might do you. Of course, for that purpose, it’s about $50 overpriced. If you’re wanting to learn more about the fundamentals of evaluating energy markets, this book really has absolutely nothing to say. Don’t be fooled by the title.
Walter Livingston (verified owner) –
You can definitely find a better book on commodity deriatives than this one. As far as trading energy futures & options, these guys were totally clueless.
Murphy Hayden (verified owner) –
This is a great book. It’s well written and easy to read. However, there is very little here in terms of specifics to energy per se. The book spends a lot of time describing basic futures and options concepts. Still, if you’re new to finance and want an introduction to the energy markets, this book is for you. Especially valuable was the appendix at the end of the book which summarizes various popular different energy future contracts.
Wade Flowers (verified owner) –
The authors are two unknowns in the energy trading field. The book covers basics of futures trading. Nothing specific of energy and energy trading. Energy futures trading is a complex and useful topic, this is not the book that explains any in depth concept.
Rosemary Snow (verified owner) –
I have been teaching an Energy Management course for the last (10) years at two different 4-year universities. For the first few years, there was very little in the way of a textbook choice. When I researched for a new book (5) years ago, I was very pleased to find this book. While admittedly an expert crude oil trader, Errera does a great job of explaining natural gas trading as well. He touches on all the necessary basics from the underlying commodities to financial derivatives to technical analysis. No where does the reader get lost and the illustrations are a great aid. While it is a mandatory textbook for my class, I have recommended it to several others who wish to learn the basics of energy trading. If you wish to understand, on some level, the sky-rocketing energy prices that occurred in 2008,a grasp of commodity trading is essential.
Cadence Carrillo (verified owner) –
This book is terrible. It’s supposed to be for beginners, but it’s a technical mess. Organization and word flow are terrible. I’m mystified as to what some of the sentences are trying to convey. The markets are not explained well at all.
Avayah Portillo (verified owner) –
Thanks to the authors for presenting this information in language that is understandable to the masses. You have demystified a topic that is often encrypted.
Many people in the energy business would benefit greatly in their overall understanding by reading this book! It is well-organized and makes the complex business of hedging futures contracts seem logical.
I have worked with wholesale energy traders and seen the trading floor with it’s live weather maps, analytical systems, and 100 or so traders and I thought it was an exciting environment. Understanding P/(L) positions, mark to market, and familiarizing with the multitude of hedging strategies has made this intriguing business all the more interesting to me.
The book delivers exactly what its title implies. Thank you, again!
Camila Schmitt (verified owner) –
Very Informative
Kailani Dudley (verified owner) –
Wasn’t what I expected. Most of the book repeats the same material most of the other options books have. The book is very basic.
Travis Hernandez (verified owner) –
Outdated now, but it does a great job of covering the fundamentals. Also has a great reference guide in the back.
Wallace Arellano (verified owner) –
I thought this book would cover trading strategies unique to the energy futures markets. NOT!! It is a book filled with a lot of option strategies and technical analysis that could apply to any publicly traded equity. It contains nothing unique to futures or energy futures for that matter. Anything unique about the energy markets referred to in this book could be condensed in two or three pages. When the seller only lets you see the front cover, — buyer beware. Save your money.
Ariya Gregory (verified owner) –
A well laid out explanation of energy futures and options. It will provide the reader with enough detail so as to be functional in an energy risk mitigation or entry level trading role.
Houston Summers (verified owner) –
This is an excellent and invaluable learning tool. It is helpful to have some financial experience, namely understanding some of the terms like call and put,etc, so that you may spend more time focusing on the concepts, but not absolutely necessary.
The book is logically organized to start with an overview of the futures market,followed by an overview of futures, generalized hedging, and options. All topics are related to energy commodities with easy to understand explanations. Relevant details relating to the energy market (definitions of spark spreads, inter-exchange hedging strategies, etc) are included.
Although I could not go into the market and trade commodities after reading this book, I could understand the overall concept of hedging energy futures and options and this serves as an excellent primer to the next level.
I would say that this book is at about the college senior level, easy on the math and not heavy on modeling. I would recommend it for the beginning MBA student but not at a PHD level.