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
Reviews
Clear filtersThere are no reviews yet.