A hands-on guide to navigating the new fuel markets Fuel Hedging
and Risk Management: Strategies for Airlines, Shippers and Other
Consumers provides a clear and practical understanding of commodity
price dynamics, key fuel hedging techniques, and risk management
strategies for the corporate fuel consumer. It covers the commodity
markets and derivative instruments in a manner accessible to
corporate treasurers, financial officers, risk managers, commodity
traders, structurers, as well as quantitative professionals dealing
in the energy markets. The book includes a wide variety of key
topics related to commodities and derivatives markets, financial
risk analysis of commodity consumers, hedge program design and
implementation, vanilla derivatives and exotic hedging products.
The book is unique in providing intuitive guidance on understanding
the dynamics of forward curves and volatility term structure for
commodities, fuel derivatives valuation and counterparty risk
concepts such as CVA, DVA and FVA. Fully up-to-date and relevant,
this book includes comprehensive case studies that illustrate the
hedging process from conception to execution and monitoring of
hedges in diverse situations. This practical guide will help the
reader: * Gain expert insight into all aspects of fuel hedging,
price and volatility drivers and dynamics. * Develop a framework
for financial risk analysis and hedge programs. * Navigate volatile
energy markets by employing effective risk management techniques. *
Manage unwanted risks associated with commodity derivatives by
understanding liquidity and credit risk calculations, exposure
optimization techniques, credit charges such as CVA, DVA, FVA, etc.
Praise for Fuel Hedging and Risk Management "Risk Management is an
art, not a science, but it certainly helps to know a lot of
science. In this book, the authors provide an excellent overview of
both qualitative and quantitative aspects of risk management and
how to design and implement effective win-win fuel oil hedging
strategies that will achieve the desired objectives under normal
and extreme market conditions. In addition to discussing key
foundational issues, the book also discusses a framework to
understand and manage hugely important second-order effects, such
as credit risk or margin calls or asset-liability mismatches, which
have the potential to turn a good idea into a bad outcome. A must
read for anyone in the finance department of a corporate, trade
house, or financial firm involved in fuel oil hedging." Diego
Parrilla, Former Global Head of Commodity Solutions and Head of
Commodities, Bank of America "This book provides highly useful
insights into hedging and risk management methodologies, as well as
theory, for the users of energy products. Dafir provides intuition
stemming from not just top-tier commodity structuring expertise,
but also broader insight from his earlier experience as a credit
derivatives and exotics trader." Mitch Matharu, former Head of
Structuring, Merrill Lynch "An Absolute Must Read. From the
fundamentals of oil markets to the key points in negotiating a
credit agreement and minimizing hedging costs, passing by the
subtleties of implied volatility surface construction and its
implications in derivatives pricing, this book offers you the
indispensable practitioner's toolbox, useful whether you are a
novice or a seasoned fuel trader." Frederic Cogny, Global Head of
Commodities Structured Products Trading, Standard Chartered Bank
"In this book, Dafir blends his deep knowledge of the commodity
markets and the vagaries of the financial market with his
incredible mathematical ability to explore fuel hedging in a manner
accessible to Fuel Procurement Departments, CFOs and board
members." Mark Long, Former Head and Managing Director of Merrill
Lynch Commodities Asia "...This book is a hands-on guide for anyone
interested in "Fuel Hedging and Risk Management", including lawyers
involved in the execution of commodities hedging transactions and
related ISDA and CSA negotiations." Justin Boyd, Former Head of
Financial Markets Legal, Standard Chartered Bank
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