Course 16 of 20 · Freight and Shipping Desk Academy

Freight Options

Stage D, Curves, hedging and carbon cost. Level 8 of 10.

Freight option valuation and the use of asymmetric payoffs to cover tonnage exposure where a linear hedge would overcommit.

120 chapters · 11 modules · every chapter one 8 to 10 minute explainer · builds on: Course 13, Course 14, Course 15

Enrol or enquire See the 120 chapters
How a chapter is delivered

One chapter is one idea taken to the point of use

Each chapter covers one idea to the point where you can use it, and comes two ways: a narrated explainer, and a deep dive audio discussion of around thirty minutes that works the same material at depth.

Self-paced throughout, and the same chapters can be taught as a cohort. 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 · 120 chapters

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

M0 Where a Freight Hedge Overcommits Ch 1-11
  1. The Cargo That May Not Lift and the Swap Already Sold
  2. Three Freight Commitments That May Never Happen
  3. Why Paper Sold Against a Maybe Becomes a Position
  4. Volume You Control Against Volume a Charterer Declares
  5. A Right on a Route, Not on a Ship
  6. An Underlying Nobody Can Hold or Store
  7. Priced Off the Screen, Not Off Your Tonnage View
  8. Where Route Options Trade and In What Units
  9. Who Writes Freight Options, and What They Are Really Selling
  10. The Capabilities Carried Into This Material
  11. What a Desk Can Decide Once It Can Price a Route Option
M1 The Route Index as an Underlying Ch 12-22
  1. A Daily Assessment Is Not a Price You Can Trade
  2. The Monthly Average Is the Underlying
  3. Counting the Index Days Inside a Declaration Month
  4. A Strike in Worldscale Points and the Annual Flat Rate
  5. Dollars per Day, Dollars per Tonne, and the Strike You Choose
  6. Single Route or Timecharter Basket
  7. Routes With Too Few Prints to Option
  8. The Route That Changed Definition Mid-Contract
  9. Converting a Route Option Back Into Vessel Days
  10. Reading a Freight Option Quote Off a Broker Sheet
  11. Where Freight Option Liquidity Actually Sits
M2 Exercise Into a Freight Swap Ch 23-32
  1. Exercise Hands You a Freight Swap
  2. Cash Settlement Against the Route Average
  3. Why the Decision Is Mostly Taken Before Declaration Day
  4. Declaration Deadlines on a Desk That Works to Laycan Dates
  5. An Option Over a Quarter and the Strip It Becomes
  6. Early Declaration on a Route, and Why It Rarely Pays
  7. The Declaration Nobody Made
  8. Matching the Option Confirmation to the Fixture It Protects
  9. The Right to Fix a Vessel Rather Than Settle Cash
  10. The Morning After a Declaration
M3 Route Volatility Ch 33-44
  1. Measuring Movement From a Daily Route Series
  2. Stale Prints and a Volatility You Cannot Trust
  3. Why a Capesize Route Moves Further Than a Handysize One
  4. Rates Spike Upward and Grind Downward
  5. Why the Upside Costs More Than the Downside
  6. The Seasonal Shape of Route Movement
  7. Congestion and Ballast Distance as Causes of Movement
  8. Front Months Move More Than Back Months
  9. What Monthly Averaging Takes Out of the Premium
  10. Why a Basket Moves Less Than the Routes Inside It
  11. Where a Route Volatility Number Comes From
  12. Two Desks, Two Route Volatilities, One Quote
M4 Valuing a Route Option Ch 45-56
  1. The Three Inputs That Decide a Route Premium
  2. The Part of the Premium Already Settled
  3. Paying for the Prints Not Yet Published
  4. Why a Freight Premium Falls in Steps
  5. A Premium Quoted in Points and Paid in Dollars
  6. Mean Reversion and the Long-Dated Route Option
  7. Pricing Off a Curve With Four Liquid Points
  8. A Premium Taken Apart, Part One: The Capesize Route
  9. A Premium Taken Apart, Part Two: The Answer and Its Sensitivity
  10. Checking a Dealer's Route Option Price
  11. Why the Same Option Is Worth More to an Owner
  12. Marking a Route Option as the Month Prints
M5 The Optional Cargo Ch 57-67
  1. The Optional Lifting You Granted Without Pricing It
  2. Counting the Declarable Cargoes in a Programme
  3. What the Declaration Window Is Worth to the Charterer
  4. Pricing an Optional Cargo as a Route Call
  5. The Narrow Window That Makes an Option Cheap to Grant
  6. Covering a Granted Lifting With a Bought Route Call
  7. The Optional Cargo Declared Into a Spiked Market
  8. The Optional Cargo That Was Never Declared
  9. Charging for Optionality Inside the Freight Rate
  10. The Owner's Right to Substitute Tonnage
  11. An Optional Cargo Package Weighed From Both Sides
M6 The Declarable Extension Ch 68-77
  1. The Extension Option Inside a Period Charter
  2. Valuing an Optional Year Against the Timecharter Curve
  3. The Extension Declared Into a Rising Market
  4. The Extension Nobody Took and the Open Position Left Behind
  5. Hedging an Extension You Expect to Be Declared
  6. Declaration Dates Stacked Across a Fleet
  7. Covering a Cluster of Declarations With One Route Option
  8. The Redelivery Range as an Option on Position
  9. The Option to Substitute a Different Vessel Class
  10. A Purchase Option at the End of a Charter
M7 Asymmetric Cover Where a Swap Overcommits Ch 78-89
  1. The Overcommitment Test
  2. When the Firm Swap Is Still Right
  3. The Firm Programme and the Declarable Remainder
  4. How Many Lots a Declarable Cargo Needs
  5. Setting the Strike at the Voyage Breakeven
  6. Setting the Strike at the Vessel's Daily Cost
  7. A Floor Under Owned Days and a Ceiling Over Chartered-In Days
  8. The Operator Long Tonnage and Short Cargo
  9. A Swap and a Route Call on One Declarable Lifting
  10. The Premium Expressed as Dollars per Vessel Day
  11. When Cover Costs More Than the Voyage Margin
  12. Converting a Route Option Once the Cargo Firms Up
M8 Writing Route Options Against Controlled Tonnage Ch 90-99
  1. The Owner Who Sells Forward Earnings as a Call
  2. Covered by Vessel Days, Not by a Credit Line
  3. The Call Exercised While the Vessel Is Still at Sea
  4. Off-Hire on the Day the Option Pays
  5. Selling a Put to Cheapen a Floor
  6. Counting Written Options Against the Fleet That Must Perform
  7. Premium Income Mistaken for Freight Earnings
  8. Two Charterers Declaring Into the Same Vessel Days
  9. Where Written Freight Risk Stops Being Covered
  10. Marking a Written Option When the Route Gaps
M9 Two-Sided Cover on a Freight Route Ch 100-109
  1. A Floor and a Ceiling Around a Timecharter Rate
  2. Choosing the Corridor From the Vessel's Cash Breakeven
  3. What the Owner Gives Up When the Market Runs
  4. The Charterer's Corridor Around Chartered-In Tonnage
  5. Capped Cover and the Route Level Where It Stops
  6. A Right to Enter a Freight Swap Later
  7. The Extendable Paper Position
  8. Cover That Disappears When the Route Spikes
  9. An Option on the Spread Between Two Vessel Classes
  10. What a Dealer's Freight Corridor Is Charging For
M10 A Worked Programme, and the Limits Ch 110-120
  1. The Book: Firm Voyages, One Optional Cargo and an Extension
  2. A Worked Programme, Part One: Firm Against Declarable
  3. A Worked Programme, Part Two: Pricing the Declarable Cargo
  4. A Worked Programme, Part Three: Choosing Route and Strike
  5. A Worked Programme, Part Four: The Month the Route Doubled
  6. A Worked Programme, Part Five: The Month Nothing Was Declared
  7. A Worked Programme, Part Six: The Year Reconciled
  8. The Same Programme Covered Entirely With Swaps
  9. Judging a Route Option Programme Over Several Years
  10. What Route Options Cannot Do
  11. Where Asymmetric Freight Cover Goes Next

The brochure gives each of these 120 chapters a paragraph on what it covers and what you can do once you have worked through it.

This is course 16 of twenty

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

Enrol or enquire See the whole pathway