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FINANCIAL MARKET COURSES

Commodities – Trading

This course explains a range of important futures pricing concepts, such as cost of carry, contango, and backwardation, many of which are particular to the commodities market. A variety of commodity trading and hedging strategies are also discussed in detail.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Identify the key concepts that are relevant to the pricing of commodity futures

    Recognize the main trading and hedging strategies used by commodity market participants

  • COURSE OUTLINE

    Topic 1: Key Pricing & Trading Concepts

    Futures Prices & the Cost of Carry

    o Example

    Other Key Commodity Pricing Concepts

    o Contango/Backwardation

    o Basis

    o Convenience Yield

    Topic 2: Trading & Hedging

    Overview of Commodity Trading & Hedging Strategies

    Key Trading & Hedging Strategies

    o Speculative Trade

    o Cash-and-Carry Arbitrage

    o Reverse Cash-and-Carry Arbitrage

    o Hedging

    • Long Hedge

    • Short Hedge

    • Impact of Changes in the Basis

    • Strip Hedge & Stack Hedge

    o Commodity Swap

    o Intercommodity Spread

    • Crack Spread

    o Intracommodity Spread

    • Example

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    60 Minutes

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