Thursday, 11 August 2022, 1:03 PM
Site: Dark Energy Consulting
Course: Free Simple Glossary of Energy Trading terms (Simple Glossary)
Glossary: Free Simple Glossary of Energy Trading terms
nick

Swap

by Nick Henfrey - Saturday, 9 May 2015, 7:14 AM
 

An Energy Swap is generally a swap of two different prices on an identical, or similar, Energy underlier

For much more information please refer to the Detailed Glossary

nick

Basket

by Nick Henfrey - Saturday, 9 May 2015, 7:14 AM
 

A set of indices used to price a trade

For much more information please refer to the Detailed Glossary

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Forward

by Nick Henfrey - Saturday, 9 May 2015, 7:14 AM
 

A Forward, or Forward Contract, is an agreement to buy or sell a commodity at a fixed time in the future

For much more information please refer to the Detailed Glossary

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Clearing

by Nick Henfrey - Saturday, 9 May 2015, 7:14 AM
 

A form of settlement where responsibility for payment is passed to a third party: a Clearing House or Clearing Broker

The Clearing House accepts responsibility for settling the deal.

Credit risk for the seller in the trade is reduced to almost zero

The Clearing House minimizes its Credit Risk by daily margining

For much more information please refer to the Detailed Glossary

nick

Settlement

by Nick Henfrey - Saturday, 9 May 2015, 7:14 AM
 

The Business Process or Capability covering the payments relating to trading activities. It includes agreeing payments, making them, and ensuring that payments are received at the correct times

For much more information please refer to the Detailed Glossary

nick

Margining

by Nick Henfrey - Saturday, 9 May 2015, 7:14 AM
 

Margining is a form of Settlement, whereby exposure to Credit Risk between two parties is limited by keeping the overall Credit Exposure below a certain threshold by means of Margin payments between the parties whenever the threshold is breached

For much more information please refer to the Detailed Glossary

nick

Futures Contract

by Nick Henfrey - Saturday, 9 May 2015, 7:14 AM
 

A Futures Contract is an agreement to buy or sell a commodity at a fixed time in the future executed on or with an Exchange

For much more information please refer to the Detailed Glossary

nick

Spread

by Nick Henfrey - Saturday, 9 May 2015, 7:14 AM
 

A spread is a difference in price, or value, of two similar but different underliers

For much more information please refer to the Detailed Glossary

nick

Option

by Nick Henfrey - Saturday, 9 May 2015, 7:14 AM
 
At its simplest an energy option is an instrument that gives the buyer the right, but not the obligation, to buy, or to sell, a commodity at a specified price at some point in the future.
 
More complex options may be financially settled, the payout being dependent on some condition(s) being met, and varying with some observable value(s) at the time of exercise
 
There is usually a single non-refundable payment made by the buyer of the option (the holder) to the seller of the option (the writer) - this is the option premium
 

For much more information please refer to the Detailed Glossary

nick

Execution

by Nick Henfrey - Saturday, 9 May 2015, 7:14 AM
 

In trading terms execution is the act that makes a trade a legally binding contract between the trading parties

For much more information please refer to the Detailed Glossary