Futures, swap & option contracts
Derivatives are applied to manage price risk. Exposures are hedged with these tools. We offer expertise in the field of application and valuation.
Options are more complex than forwards and futures. Next, the characteristics of options are much more diverse compared to forward and futures. Furthermore, valuation of options is much more difficult relative to the valuation of swap agreements. All in all, the specifics of options leads to a desire for specific knowledge. Mercurious delivers this expertise by means of her training courses and advisory/consultancy services.
Sophistication in this field of expertise is not only needed in the front office of trading organisation, but also with their middle and back offices. After all, portoflio management can be applied with the inclusion of options. Next, options can be of use to hedge exposures and is thus very relevant for risk management. Treasury de partment of corporates and operations departments also need to master the specifics of options in order to hedge currency (FX) exposures and interest rate risk.
Over the last years, the interest for trading power options has increased recently. These specific power options (put and call options) are much more complex than option contracts on other commodities. This has to do with power-specific aspects, such as non-storability of electricity, price mean-reversion and possible negative prices in teh spot markets.
Next to outright options (actual contracts, tradable agreements), embedded options are of relevance. Sales departments sell flexibility to customers which has to be managed by the trading entity. The uncertainty regarding when customers off-take how much precisely brings along a significant exposure and requires financial compensation.
And next to outright and mebdeed options, Mercurious is expert in real options and the real option approach. We help market participants to master know how and skills in the field of physical assets, hedging future cash flows, asset optimization, the valuation of flexibility, pricing of options and Greek variables as indicators for sensitivities.
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