450 - Fundamentals of Energy Trading and Risk Management
Core/Elective: Core
Credits: 0.5
Quarter Taught: Fall
Synopsis:
This course provides a broad overview of the nature of physical and paper trading markets (with a particular focus on energy) and the various strategies that can be employed by firms and investors in them. The course touches on issues relating to risk management and discusses the use of derivatives to combat risk in resource markets. Additionally, it will explore broad topics in the field of commodity futures such as backwardation and contango.
Course Objectives:
The course is primarily focused on the following goals:
- Understanding Determinants of Demand and Supply: A key objective of this course is understanding the causal factors of price/quantity fluctuations in energy markets.
- Understanding Derivatives and Derivatives Pricing: Students must understand the formation and pricing of derivatives from two angles: specific to energy and general to commodity markets.
- Risk Management Techniques in Volatile Markets: Students must learn techniques of risk management as they broadly apply to markets and specifically to energy commodity markets. This is also an extremely applicable personal skill to have.
- Understanding the Difference Between Paper and Physical Trading: Students will approach all the topics in the course with a clear notion of what forms of energy trading they pertain to. This difference will be crucial for students to understand going forward.