Course 18 of 20 · Crude Oil Desk Academy

Options and Structured Hedge Decisions

Stage F, Structuring and integration. Level 9 of 10.

Option mechanics on crude, structured hedges, and when optionality beats a linear hedge.

119 chapters · 11 modules · every chapter one 8 to 10 minute explainer · builds on: Course 11, Course 12

Enrol or enquire See the 119 chapters
How a chapter is sized

One chapter is one idea taken to the point of use

Each chapter is a single self-contained explainer of 8 to 10 narrated minutes, covering one idea to the point where you can use it.

Chapters run in order. Each one assumes only what the chapters before it taught, and capability belonging to a later course is named and deferred rather than half-covered.

Curriculum

11 modules · 119 chapters

Open any module for its full chapter list, in teaching order.

M0 What an Option Actually Is Ch 1-10
  1. The Right Without the Obligation
  2. Calls, Puts and Which One a Physical Position Needs
  3. The Three Terms That Define an Option
  4. Buyer and Writer: Two Very Different Risk Profiles
  5. Payoff Diagrams a Physical Trader Can Actually Use
  6. Why the Premium Is Not a Fee
  7. Optionality Set Against the Swap You Already Know
  8. Where Crude Options Actually Trade
  9. Moneyness and the Language of the Market
  10. Where Optionality Sits in the Hedging Toolkit
M1 Exercise, Settlement and the Contract Ch 11-20
  1. European and American Exercise in Actual Crude Contracts
  2. Cash Settlement Against a Published Assessment
  3. Options That Deliver a Futures Position
  4. The Expiry Calendar and the Day Things Decide Themselves
  5. Automatic Exercise, Abandonment and Contrary Instructions
  6. Reading an Option Confirmation
  7. How Premium Is Quoted and When It Is Paid
  8. Exchange Rules Against Bilateral Documentation
  9. Give-Ups, Brokers and the Chain Behind a Quote
  10. A Settlement That Went Wrong on the Paperwork
M2 Where Option Value Comes From Ch 21-30
  1. Intrinsic Value: What the Option Is Worth Right Now
  2. Time Value: Paying for What Has Not Happened Yet
  3. Why Time Value Decays Unevenly
  4. The Forward Price, Not the Spot Price, Is the Reference
  5. How Curve Shape Changes What a Strike Means
  6. Interest Rates and Why They Barely Matter Here
  7. Put-Call Parity as a Sanity Check
  8. Why Two Houses Quote the Same Option Differently
  9. A Premium Taken Apart
  10. What Changes the Premium Between Quote and Trade
M3 The Sensitivities, Read Commercially Ch 31-41
  1. Sensitivities as Answers to Practical Questions
  2. Delta as the Barrel Equivalent of an Option
  3. Why Delta Moves and a Swap's Does Not
  4. Gamma: The Reason the Hedge Will Not Stay Still
  5. Theta: Paying Rent on Protection
  6. Vega: Exposure to a Change of Opinion
  7. Which Sensitivities a Physical Desk Should Actually Monitor
  8. Reading a Position Report With Options In It
  9. Delta Hedging and Why Most Physical Desks Decline It
  10. The Sensitivities of a Combined Physical and Option Position
  11. When a Sensitivity Number Is Simply Wrong
M4 Volatility: The Input Everyone Misreads Ch 42-52
  1. Volatility Is a Measure of Movement, Not Direction
  2. Historical Volatility and What Window You Chose
  3. Implied Volatility: The Market's Price of Uncertainty
  4. Why Implied and Historical Diverge
  5. The Volatility Smile Without the Mathematics
  6. Term Structure of Volatility
  7. Where a Desk Gets a Volatility Number It Can Trust
  8. Volatility in a Market With Jumps
  9. Seasonality, Events and the Calendar
  10. The Three Ways Volatility Gets Misused on a Physical Desk
  11. What You Are Really Buying When Volatility Is High
M5 Average-Price Options and the Physical Pricing Period Ch 53-62
  1. Why a Single Expiry Date Fits a Cargo Badly
  2. The Asian Option: Settlement Against an Average
  3. Why an Average Costs Less Than a Point
  4. Building the Averaging Window to Match the Invoice
  5. Weighted and Partial Averages
  6. Average-Strike and Lookback Variants
  7. Why Averaging Changes the Sensitivities
  8. Pricing an Average When Observations Are Few
  9. Rolling Monthly Averages Across a Term Contract
  10. A Cargo Hedged With an Average-Price Put
M6 Collars, Three-Ways and Participating Structures Ch 63-74
  1. Combining Options Into a Single Commercial Shape
  2. The Collar: Protection Funded by Giving Up Upside
  3. Choosing the Two Strikes of a Collar
  4. The Zero-Cost Collar and What It Actually Costs
  5. Three-Way Structures: Cheapening the Floor Again
  6. The Hole in a Three-Way and Who Falls Into It
  7. Participating Structures and Partial Upside
  8. Spreads: Buying One Strike and Selling Another
  9. Knock-Outs, Knock-Ins and Conditional Protection
  10. Extendables and the Right to Change Your Mind Later
  11. Reading a Structured Quote as a Set of Legs
  12. Which Structure for Which Exposure
M7 Premium, Budget and the Cost Question Ch 75-85
  1. Who Pays for the Hedge and Out of Which Budget
  2. The Premium as a Percentage of Cargo Value
  3. Why Zero-Cost Is the Most Expensive Phrase in Hedging
  4. Making the Surrendered Upside Visible
  5. Premium Timing and the Cash It Needs
  6. Deferred Premium and Financed Protection
  7. Comparing Two Quotes That Are Not Comparable
  8. The Cost of Protection You Did Not Need
  9. Partial Cover as a Budget Decision
  10. Rolling Protection and the Cost of Repetition
  11. Building a Defensible Hedging Budget
M8 Optionality Against the Linear Hedge Ch 86-97
  1. The Only Question That Matters: What Are You Protecting Against
  2. When a Linear Hedge Is Simply Better
  3. When Optionality Earns Its Premium
  4. Asymmetric Consequences and Why They Justify Asymmetric Cover
  5. Hedging a Decision You Have Not Yet Taken
  6. An Option as a Disguised View
  7. The Expensive Way to Be Right
  8. A Collar and a Swap on One Exposure
  9. Hedge Effectiveness When the Hedge Is an Option
  10. The Cost of Being Wrong in Each Direction
  11. Documenting Why This Structure and Not That One
  12. Unwinding, Restructuring and Admitting a Hedge Is Wrong
M9 Uncertain Volume and Contingent Exposure Ch 98-107
  1. The Problem a Linear Hedge Cannot Solve
  2. Where Volume Uncertainty Comes From
  3. Expected Volume Is the Wrong Number to Hedge
  4. Hedging the Certain Core and Optioning the Tail
  5. Swing, Tolerance and the Counterparty's Option
  6. Hedging a Tender Before You Know You Have Won
  7. Production Profiles and Declining Volume
  8. Contingent and Compound Structures
  9. Multi-Cargo and Basket Structures
  10. A Term Supply Obligation With Uncertain Offtake
M10 Selling Optionality, Governance and Limits Ch 108-119
  1. Why Selling Options Is Attractive and Dangerous
  2. Covered and Uncovered: The Distinction That Decides Everything
  3. The Optionality a Physical Desk Sells Without Noticing
  4. Pricing What You Give Away in a Negotiation
  5. Limits That Actually Constrain an Option Book
  6. Approval, Mandate and the Instruments a Desk May Trade
  7. Independent Valuation of a Structured Position
  8. Reporting a Structured Book to People Who Do Not Trade
  9. The Structures a Physical Desk Should Refuse
  10. A Full Structured Hedge Decision, Worked End to End
  11. What Options Cannot Do
  12. Carrying This Into the Portfolio and the Simulation

The brochure gives each of these 119 chapters a paragraph on what it covers and what you can do once you have worked through it.

This is course 18 of twenty

It stands alone, and it is also the entry point to the Crude Oil Desk Academy pathway.

Enrol or enquire See the whole pathway