In-Person: ICE OIL TRADER ACADEMY
PROGRAMME. MODULE 2.
Trading Simulation, Paper Trading & Price Risk Management
ICE Education Europe • London, UK
29 January - 2 February 2023
DAY 1. UNDERSTAND WHAT DRIVES THE BRENT FUTURES PRICE
Trading Best Practice
- Trading best practice and discipline
- Useful trading rules
Physical Products, Freight and FOB/CIF
- What are Refined Products and their main uses
- How are Products priced and traded
- Understand Worldscale and Freight rates
- How to trade Products cargoes on a FOB and CIF basis
Physical Products Trading Simulation
- Manage a portfolio of physical Products longsand shorts
- Negotiate and enter deals, book ships, managecargo movements
Physical Crude Trading
- How Crude Oil is produced and exported
- What determines the value of different Crude Oils
- How Crude Oil is priced and traded, benchmark pricing
Physical Crude Cargoes Trading Simulation
- Buy and Sell cargoes of North Sea and West African Crude Oil
- Understand how refinery yields affect Crude differentials
- Appreciate the importance of liquidity in physical Crude markets
DAY 2
Introduction to Refining
- Basic Crude distillation and complex refining
- Refinery Optimisation activities
- Calculate Refinery margins and Crude pecking orders
Refining Simulation
- Manage a Refinery: Buy Crude and sell Products
- Calculate Refinery margins and adjust run rates accordingly
- Optimise your Refinery, switch Crudes as prices change
Spreads and Backwardation/Contango
• What are spreads and how are they calculated
• Why do traders use spreads
• Market structure – Contango/Backwardation
Time Spreads Simulation
- Trade upto 3 different spreads on European Gas Oil
- Understand how spreads react to fundamental news
Storage Valuation and Optimisation
- Contango markets: What do “carry” and “full carry” mean
- Valuing Storage and hedging Storage trades
- Optimising Storage: Intrinsic and Extrinsic value
Storage Valuation Exercise
- Value Storage offers and bid for capacity
- Design and execute hedging strategies for your storage
Storage Optimisation Simulation
- Use futures to manage a portfolio of physical oil and tankage
- Move oil in and out of storage as you react to market structure
- React to the volatility of time spreads and maximise extrinsic value
Trading Futures using Technicals
- Why use technical trading
- Common indicators used in technical trading; Trendlines; Moving
- Averages; Line/Candlesticks/Bar/Point & Figure; Retracements; Continuation and Reversal signs; Volume and Open Interest
- Examples of Technical Trades in current markets
- Technical Charting Simulation
- Trade techincals using Tradesignal’s professional chart analysis software
- Spot trends and use indicators to identify trade entry/exit points
DAY 3
Floating Prices and Hedging
- What is meant by a floating price
- Calculating the daily hedge, and forward pricing profiles
- Managing pricing risk on a portfolio of trades
Hedging Physical Cargoes Simulation
- Respond to new trades and manage the basic daily hedge
- Adjust hedges as BL dates and quantities change
Swaps and Hedging Spread Exposure
- What is a swap, and how are they traded
- Using swaps to manage risk and create trading strategies
- Differential swaps and CFD’s
- Managing spread exposure
Hedging with Swaps Simulation
• Respond to new trades and manage a complex daily hedge
• Use swaps and futures contracts to manage risk
Geographies and Arbitrage Spreads
- Regional supply/demand and its effect on spreads
- Spread trading strategies
Gas oil Arbitrage Spreads Simulation
- Trade the futures spread between Europe and U.S.
- Understand the impact of local supply/demand and physical arbitrage
- Hedging Physical Arbitrage Trades
- How to calculate and identify Arbitrage opportunities
- Relative volatilities: Futures, Cargoes and Freight
- Using futures to hedge Arbitrage movements
Arbitrage - Worked Example
- Use of a spreadsheet to calculate and monitor Arbitrage values
- Placing an Arbitage trade: Volatility, liquidity and order of trades
- Trans-Atlantic Crude Arbitrage Simulation
- Calculate Arbitrage opportunities across a portfolio of Crude Oils
- Place all the trades necessary to Arbitrage Crude Oil cargoes
DAY 4
Using the paper derivative markets
- Derivative instruments & hedging
- Practical: Hedging exercises
- Basic risk
- Basis trading
Spread trading
- Time
- Crack
- Arb
- CFD’s & DFL’s as part of the mix
- Using the EFP & EFS mechanisms
- Case Study practical:
- Hedging as a producer
- Hedging as a refiner
- Hedging as a consumer
- Trigger pricing
DAY 5. HOW CAN OPTIONS BECOME PART OF YOUR TRADING PORTFOLIO
- Options 101
- Inputs to the premium and pricing
- Practical: Hedging exercises
- Time & Volatility
- The greeks
- Options trading strategies
- Practical: Trading with Options
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