FIN 686: Introduction to Energy Trading ROOM: Bloomberg Lab, B-12
Professor: Gonzalo Morales Office: BUS 2-32C
Email: [email protected]
Office Hours: By appointment Course website: content contained within the eClass system COURSE OVERVIEW
The goal of this course is to introduce students to energy trading. Trading takes place across the energy spectrum of oil, refined products, natural gas, electricity and emissions. The trades can be physical or financial. Students will develop an understanding of the traded energy commodities, the instruments available for trading, as well the other aspects like risk management and regulation. The course will include a virtual trading game where the students will actively trade futures over the semester (Rotman Portfolio Manager). As well, we will utilize the Rotman Trading competition software to run physical energy simulations (Rotman Interactive Trader). Guest speakers are regularly invited.
COURSE MATERIALS
There is no text required for this course and access to the Rotman software will be granted by instructor. Any readings I use will be available freely online or available through the University of Alberta Libraries on-line access. You are expected to remain up-to-date on issues related to the energy industry and energy markets. The topics of discussion may change rapidly as news evolves.
GRADING (grading rubrics will be provided in class)
Spread forecast– Individual (25%)
You are to present the one year forecast for a spread, discussing the commodities, historical performance of the spread, the fundamentals that affect it, how it will perform over the next year, drivers and risks to your forecast, your expected target price. You will make a short presentation, followed by a 3 page briefing note.
Trading book performance - Individual (40%)
Students are expected to trade regularly over the semester, executing a minimum number of trades over a set time period. You are to present your overall book’s performance, identify your major wins and/or losses and takeaways from the simulation in a briefing note and in a class presentation.
Trading simulation – groups of 2 (30%)
We will finish the class with the Rotman commodity case 5. This final project will be done in the last day of class and will bring together all your knowledge of trading developed over the semester.
Active class participation – 5%
Participation, assignments, and the final project represent the only marks available to students. Extra work to improve your grade is not possible. Once assigned, the final grade in the class will not be changed except in the case of a recording error. If you feel that your grade is incorrect, you must notify me during the one-week period following the receipt of your marked assignment.
Evaluations will be expressed in raw marks throughout the course. Grades (using the letter grading system) will be assigned only to the final distribution of mark totals for the course. Grades will be assigned based on a combination of absolute achievement and relative performance in this class.
SCHEDULE (order is tentative)
Week Topic
1 Sep 4 and 6 Class intro, Bloomberg terminal intro Energy trading 101
2 Sep 11 and 13 Introduction to energy markets: oil and refined products 3 Sep 18 and 20 Introduction to energy markets: natural gas and electricity
Trading simulation begins
4 Sep 25 and 27 Trading crude oil: markets and instruments 5 Oct 2 and 4 Refining and cracks
Trading refined products: markets and instruments 6 Oct 9 and 11 Rotman case
Student presentations on spread forecasts related to oil and refined products
7 Oct 16 and 18 Trading natural gas and LNG Rotman case
8 Oct 23 and 25 Trading electricity
Student presentations related to natural gas 9 Oct 30 and Nov 1 Rotman case
10 Nov 6 and 8 Rotman case 11 Nov 13 and 15 READING WEEK 12 Nov 20 and 22 Trading simulation ends
Rotman case
13 Nov 27 and 29 Student presentations on trading books 14 Dec 4 and 6 In class final trading simulation
ADMINISTRATIVE INFORMATION
i. Policy about course outlines can be found in Course Requirements, Evaluation Procedures and Grading of the University Calendar.
ii. The University of Alberta is committed to the highest standards of academic integrity and honesty. Students are expected to be familiar with these standards regarding academic honesty and to uphold the policies of the University in this respect. Students are particularly urged to familiarize themselves with the provisions of the Code of Student Behaviour (online at www.governance.ualberta.ca) and avoid any behaviour which could potentially result in suspicions of cheating, plagiarism, misrepresentation of facts and/or participation in an offence.
Academic dishonesty is a serious offence and can result in suspension or expulsion from the University.
iii. Audio or video recording, digital or otherwise, of lectures, labs, seminars or any other teaching environment by students is allowed only with the prior written consent of the instructor or as a part of an approved accommodation plan. Student or instructor content, digital or otherwise, created and/or used within the context of the course is to be used solely for personal study, and is not to be used or distributed for any other purpose without prior written consent from the content author(s).
