1 / 10

OPTIONS FOR LARGE GAS CONSUMERS IN VOLATILE MARKETS or

OPTIONS FOR LARGE GAS CONSUMERS IN VOLATILE MARKETS or How I stopped worrying and learned to love derivatives!. CAP. INDEX: NYMEX HENRY HUB NATURAL GAS, LAST DAY SETTLEMENT PERIOD: NOV14-OCT15 CURRENT STRIP: $4.01 (CLOSE OF BUSINESS 9-30-14)

chase-carson
Télécharger la présentation

OPTIONS FOR LARGE GAS CONSUMERS IN VOLATILE MARKETS or

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. OPTIONS FOR LARGE GAS CONSUMERS IN VOLATILE MARKETS or How I stopped worrying and learned to love derivatives!

  2. CAP • INDEX: NYMEX HENRY HUB NATURAL GAS, LAST DAY SETTLEMENT • PERIOD: NOV14-OCT15 • CURRENT STRIP: $4.01 (CLOSE OF BUSINESS 9-30-14) • VOLUME: NO MINIMUM AND CAN USE ODD LOT VOLUMES PER MONTH • OBJECTIVE: PROTECT AGAINST UPSIDE PRICE RISK, RETAIN DOWNSIDE POTENTIAL STRIKE / CAP IN $/DTH PREMIUM IN $/DTH $5.00 $0.15 $4.50 $0.25 $4.00 $0.42 PROCESS • If market settles above strike price of the cap client’s cost / dth reverts to cap price. • If market settles below strike price of the cap client’s cost / dth will be the settlement price.

  3. COSTLESS COLLAR • INDEX: NYMEX HENRY HUB NATURAL GAS, LAST DAY SETTLEMENT • PERIOD: NOV14-OCT15 • CURRENT STRIP: $4.01 (CLOSE OF BUSINESS 9-30-14) • VOLUME: NO MINIMUM AND CAN USE ODD LOT VOLUMES PER MONTH • OBJECTIVE: PROTECT AGAINST UPSIDE PRICE RISK, RETAIN LIMITED DOWNSIDE POTENTIAL, AVOID PREMIUM OUTLAY STRIKE / CAP IN $/DTH STRIKE FLOOR $/DTH $5.00 $3.32 $4.50 $3.65 PROCESS • If market settles above strike price of the cap client’s cost / dth reverts to cap price. • If market settles below strike price of the floor client’s cost / dth reverts to floor price. • If market settles between strike cap and strike floor price client’s cost will be settlement.

  4. CAPW/LIMITEDPARTICIPATION • INDEX: NYMEX HENRY HUB NATURAL GAS, LAST DAY SETTLEMENT • PERIOD: NOV14-OCT15 • CURRENT STRIP: $4.01 (CLOSE OF BUSINESS 9-30-14) • VOLUME: NO MINIMUM AND CAN USE ODD LOT VOLUMES PER MONTH • OBJECTIVE: PROTECT AGAINST UPSIDE PRICE RISK, RETAIN 50% OF DOWNSIDE POTENTIAL, AVOID PREMIUM OUTLAY STRIKE / CAP IN $/DTH DOWNSIDE PARTICIPATION $4.26 50% PROCESS • If market settles above strike price of the cap client’s cost / dth reverts to cap price. • If market settles below strike price of the cap client’s cost / dth is 50% of difference between the strike price of the cap and settlement. • i.e. Market settles at $4.00 the client’s cost / dth reverts to $4.13. $4.26-$4.00 = $0.26. $0.26 x .50 = $0.13. $4.00 + $0.13 = $4.13 clients city gate cost.

More Related