What material does the commodities course cover?
Price volatility in crude oil, gold, silver, cotton, sugarcane, wheat and cereals has created an unprecedented opportunity for corporate relationship managers to cross sell treasury products to their institutional, trading, manufacturing and high net worth customers. In our online course we present a framework for empowering client facing treasury teams to go out and cross sell high value, high margin trading concepts to clients by educating customers about their exposures and some of the solutions available to reduce the risk associated with the same exposures.
You will learn to:
- Appreciate the linkage between commodity markets (precious metals, crude oil), currencies and rates
- Trace the impact of monetary policy announcements on commodity markets
- Explain trading strategies using futures, options and exotic products
- Understand trading triggers
- Derive risk limits for counterparty exposures
The course covers:
- Core concepts such as volatilities, trailing volatilities, interconnections & relationships and trends
- Specific products and trades such as futures, forwards and options, exotic contracts etc.
- Trading tools such as analyzing the fundamentals of oil and gold
- Treasury limits such as stop loss limits, PFE, PSE or counterparty limits
- Calculating Value at Risk, Pre Settlement Risk (PSR) and Potential Future Exposure (PFE)
- Linking PFE and PSE to counterparty limits.
In the following posts we concentrate on two commodities, crude oil and gold, and discuss various methods of modeling their prices. We estimate the possible direction prices will move in response to certain market drivers. We consider the impact of the interrelationships between commodity pairs and between the commodity and other risk classes, such as currency pairs and the impact of a break-down in these relationships under times of stress. We look at market fundamentals, demand for and supply of the commodities, reducing/ increasing spreads between different blends in the case of crude oil, growth of commodity stockpiles, market growth trends in the developed and developing world, etc and how these factors could impact the results of our models.
- Understanding Crude Oil. A model for dissecting crude oil
- Crude Oil Mispricing model
- Relative Gold Price model
- Understanding Gold! Short Gold or add to your positions? A look at gold silver ratio and relative value argument
- Monte Carlo Simulator with Historical Returns
Are there any case studies provided in the course?
Aside from the real life examples used in the courses and posts mentioned above, we also provide a crude oil specific case study that covers a risk management framework for managing inventory and margin losses of a petrochemical firm. A Value at Risk based approach is utilized to determine acceptable levels of risk for the firm which is then used in devising a plan for the implementation and management of an appropriate control structure.
This case-study is available as a standalone post: Master Class: Risk for the Oil and Petrochemical Industry.
It is also covered in session III of the video course “Cross Selling Treasury Products Training Video” mentioned earlier.
What are the pre-requisites, if any, for this course?
We recommend the following basic courses that will help you become familiar with the terminology and methods used in our models:
- Market Risk Metrics
- Calculating Value at Risk (VaR)
- Building Monte Carlo (MC) Simulators in Excel
Related Comprehensive Course Packages including on-site option
- Commodity Trading Course Package
Related Online courses
Related PDF courses
- Understanding Commodities Risk
- Derivatives Crash Course
- Calculating VaR – Includes case study
Related Excel files