Course by LCTA: Commodity Price Risk Management and Hedging Strategies
16 May @ 2:00 pm - 17 May @ 1:00 pm
Please see the website for more details and for registrations
Introduction
In commodity trading, alongside market risk, price volatility is the predominant risk. Mitigating and managing price risk requires a combination of strategic knowledge, use of financial instruments, and clear organizational policies.
LCTA members’ employees should understand market risk exposure and have a comprehensive grasp of price risk, and its mitigation and management via hedging tools.
Content
Session 1: Friday, May 16, 2025 from 14:00 to 18:00
- Introduction to commodities risk management, different types of commodities risks, organizational responses and policies.
- Definition of price risk, price types and pricing mechanisms, price exposure and hedging; hedgeable and residual (basis) risks.
- Hedging methods and review of derivatives hedging instruments (futures, swaps, options).
- Practical examples and case studies of pricing mechanisms and relevant hedging techniques.
Session 2: Saturday, May 17, 2025 from 9:00 to 13:00
- Price risk measures (VaR), exposure monitoring, calibration and back testing techniques.
- Clearing and margining requirements of hedging operations, margin stress testing.
- Practical examples and case studies of price risk exposure monitoring and hedging responses, VaR back-testing.