Live Courses

Trading OTC Advanced Options and Derivatives


This two-day program will give you a comprehensive understanding of the various trading strategies employed in the world of over-the-counter derivatives.

The course examines a wide array of OTC financial instruments and includes an in-depth examination of what they are and how and when they should be used, along with different methods for pricing. The course compares and contrasts OTC instruments with exchange-traded equivalents, linear OTC instruments with nonlinear instruments, plain vanilla non-linear instruments with exotics and directionally-biased strategies with pure volatility and pure arbitrage plays.

In addition, the course provides attendees with an in-depth understanding of various valuation methodologies, liquidity and volatility analysis of OTC instruments. The course is designed to help management, traders, risk managers and backoffice personnel in the energy industry gain a thorough understanding of what these financial instruments are, when they should be employed and how they can be managed successfully.

Full Course Description

Topics covered include:

  • What OTC derivatives are and how these instruments are used in the energy industry.
  • When to use various linear and non-linear OTC derivatives.
  • How to price linear OTC derivatives.
  • How to price non-linear OTC derivatives.
  • Weather derivatives.
  • Types of basis risk, how basis is calculated and how to decide if basis risk should be hedged.
  • What basis swaps are and when they should be used.
  • Types of basis swaps including: fixed for floats, swing swaps, fixed for float swing swaps, index-differential swing swaps, EFPs, NYMEX Look-Alikes, extendible and cancelable swaps.
  • The “Greeks”.
  • Volatility: Historical and implied volatility (including volatility smiles).
  • Option pricing models including Black-Scholes, Cox, Ross, Rubenstein and Monte Carlo models.
  • Volumetric vs. delta hedging and how to simulate linear instrument hedge payout profiles with options.
  • Directional option spread strategies including costless collars, bull call and bear put spreads, financed call and put spreads, ratio spreads and backspreads and Christmas trees.
  • Volatility option spread strategies including calendars, straddles, strangles, iron butterflies and iron condors.
  • Synthetic option strategies including long call, long put, short call, short put, long futures, short futures, conversions, reversals, box spreads and jelly rolls.
  • Option exercise styles including American, European and Bermudan exercise styles.
  • Power options including monthly power options and daily power exercise options.
  • Exotic options including Asians, Spread Options, Digitals, Lookbacks, Barriers, Step-Structure Digitals; Contingent Premiums (Pay Later); Double Barriers; Double Barrier Boxes; Compound; One-Touch, Swing Options, callable and puttable forwards; strips of caps and floors; Embedded Swing options and best of options.
  • Trading Simulations: Making Money with Option Strategies

The course is applicable to all levels of the energy infrastructure, oil, natural gas, electricity and coal. Individuals in every functional area of responsibility in all energy industries whose decisions have significant financial impact will benefit from this program. Managers from areas such as trading, risk management, compliance, human resources, credit, contracts, operations, marketing, sales, supply and distribution, purchasing, financial and accounting will find the course highly beneficial.

Industry Segment
Course Level
Intermediate to Advanced
CPE Credits
EMI Credits