Tuesday, 27 September 2022, 12:26 PM
Site: Dark Energy Consulting
Course: Free Simple Glossary of Energy Trading terms (Simple Glossary)
Glossary: Free Simple Glossary of Energy Trading terms
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P&L

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

Profit and Loss (P&L) is a finance and risk reporting term to describe the profitability of an individual trade, a book, a desk, or a company. Whilst the P&L of a company includes all activity, and costs (offices, staff etc.) the trading P&L is a measure of the profitability of a single, or a set of, trade(s)

For much more information please refer to the Detailed Glossary

nick

P&L atttribution

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

Let's say we added up the P&L of all our trades today, and then did the same tomorrow - the two values would probably be different - but why?

Some reasons:

  • We booked some new trades
  • The forward curve price changed
  • The FX rate we use to give reporting currency P&L changed
  • The discounting factor changed
  • Some trades were amended

P&L attribution calculates the change in P&L for each of the above individually - and any other factors - so that the effect of each cause may be understood

For much more information please refer to the Detailed Glossary

nick

Party

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

A party is an organization, or part of an organization, which is legally involved in a trade

For much more information please refer to the Detailed Glossary

nick

Physical

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

The attribute, or adjective, physical usually refers to trades and business process that results or involves in the physical delivery of energy or a commodity

For much more information please refer to the Detailed Glossary

nick

Portfolio

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

A group of trades

For much more information please refer to the Detailed Glossary

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Position

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

All physically settled derivatives imply either an obligation to deliver, or take delivery of, a commodity at a location at some time in the future

The obligation to deliver a commodity is called a short position of that commodity at that location and time in the future

The obligation to take delivery of a commodity is called a long position of that commodity at that location and time in the future

For much more information please refer to the Detailed Glossary

nick

Position Reporting

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

Traders make, and lose, money by taking positions, either short or long at various points in the future

Open positions in the future imply a risk that needs to be managed very carefully as changes in the forward curves affect the value of the net open position

It is therefore critical that traders know their up to date position at all times

This is the purpose of Position Reporting by means of Position Reports

For much more information please refer to the Detailed Glossary

nick

Power

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

In Energy Trading terms Power is almost always synonymous with Electricity

In physics terms power is a measure of the rate of energy conversion per unit time

For much more information please refer to the Detailed Glossary

nick

Product

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

In Energy trading a Product is a standardized type of trade which may be offered by an Exchange, quoted by a Broker, or be the subject of a published Index

For much more information please refer to the Detailed Glossary

nick

Prompt

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

A term generally used in gas and power trading for trades that deliver in the near future

For much more information please refer to the Detailed Glossary