Course description
After a number of years of stagnant prices, commodities have experienced many changes over the last 15 months: with the WTI first nearby reaching very negative values in April 2020, oil companies facing a reduced demand because of Covid and their ESG ratings scrutinized by portfolio managers.
Agricultural commodities have reached higher prices as countries are concerned about food security; the same for copper and other metals involved in the construction of wind turbines and electric vehicles.
Gold has remarkably receded as a hedge against Quantitative Easing and Bitcoins seem to have replaced it.
This comprehensive 2-day course focuses on understanding price formation in Commodity spot markets, the role of Inventory in the shape of the forward curve and the trading opportunities brought by forward curves in Contango. It provides an in-depth analysis of Futures, physical and financial options in Commodities as well as the different types of investments provided by this remarkable asset class. The positioning of Bitcoins with respect to Commodities will be also discussed.
The content is designed for traders in financial institutions, managers in pension funds and insurance companies, and risk executives and corporate managers in charge of raw materials and commodities purchase.
All delegates will receive a copy of Professor Geman's reference book "Commodities and Commodity Derivatives: Modeling and Pricing for Agriculturals, Metals and Energy" published by Wiley Finance.
Upcoming start dates
Who should attend?
- Commodity traders
- Hedge fund managers & Investment bankers
- Energy Companies Executives
- Insurance and Reinsurance Companies
- Raw Materials Purchase Executives
Prior Knowledge
Some modest background in finance and a basic knowledge of commodity markets is assumed.
Training content
Day One
Fundamentals of Spot and Forward Commodity Markets
- The Outlook of the World Economy and Commodity Markets in 2021
- Price Formation in Commodity Spot Prices
- Commodity Exchanges: The Old and the New
- The Importance of Liquid Indexes for the Growth of Derivatives
- The Role of Shipping in Commodities Trading
- Inventory and Commodity Spot Price Volatility
- Theory of Storage and Convenience Yield
- Shape of the Forward Curve and Profitable Carry Trade Strategies
- Margin Deposits and Margin Calls in Futures Trading: the Comparison between Oil Futures and Bitcoins Futures
- Commodity Swaps
Metals
- Base Metals
- Aluminium
- Copper and Other Base Metals
- Metals for Wind Turbines and Electric Vehicles
- The London Metal Exchange, Shanghai, Singapore
- Precious Metals
- Gold and its loss of attractiveness
- Platinum, Palladium and their industrial use
- Is Bitcoin a Commodity?
Energy
- Crude Oil, the Exchanges and indexes
- Changes in the Forward Curve and Trading Strategies
Case Study: Hedging Strategies for the Airline Industry
Day Two
Energy (cont.)
- Natural Gas, Shale Gas and LNG; the role of Singapore
- Coal and the contrasted situation across major countries
- Electricity Production: Solar, Wind and Batteries
- Weather Derivatives and Emission Permits
Financial and Physical Options in Commodities
- Plain Vanilla Options on Futures
- Traded Average Price Options (TAPOs)
- Exchange and Spread Options
- Volatility Skew/Smile in Commodities
- Valuation of Physical Assets. The example of a Combined Cycle Turbine, an Aluminium Smelter, a Gas Storage Facility
Agricultural Commodities
- Weather Risk and Country Risk in Agricultural Commodities
- Inventory and Price Volatility
- Fertilizers and Fertilizer Swaps
- Wheat, Corn, Coffee
- Water as a Crucial Commodity
Investing in Commodities
- The different Commodity Indexes
- Structured Notes on Commodities
- Investing in Shares of Commodity - Mining companies
- Credit Spreads and ESG Spreads in Bonds issued by the Extractive Industry
Certification / Credits
London Financial Studies is registered with CFA and GARP Institute as an Approved Provider of continuing education programs. GARP & CFA Institute members attending this course are eligible for 16 CE/CPD credits.
Reviews
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London Financial Studies - Capital Markets Executive Education in the USA
Global markets move quickly, evolving continuously and deepening in complexity. Over the past decades London Financial Studies has provided specialist executive education programs and short courses focused exclusively on global capital markets. Preparing only the highest quality and most relevant...
Helyette Geman strikes a perfect balance between theory and practice. An excellent introduction to commodity risk!