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  • Introduction to Commodity Hedging Using Futures and Options

Course Details

Introduction to Commodity Hedging Using Futures and Options

New dates to be announced for On-Line Training. The advanced course for previous attendees of the Introduction course will be announced soon.

This course has combined the terminology and mechanics of hedging with futures and options in an easy, understandable format. The terminology will be a new language that will enable you to immediately develop marketing/procurement plans that incorporate necessary risk management strategies for your operation. You will gain vital new insights into how to maximize your opportunities while you minimize your market risks. An indepth look at new revisions for the Wetern Barley contract and basis implications will be included, as well as a study of CWB contracts.

 

WHO SHOULD ATTEND

This introductory course is geared to new marketing and procurement managers, auditors, accountants and merchandising assistants whose business is commodity based whether in agriculture, energy or agri-food sectors and have risk of unfavourable price and exchange rate changes.

Past participants have included merchandising assistants, grain traders, auditors, accountants, feedlot and feed mill operators, farm managers, procurement managers for flour mills, packing plants, cookie manufacturers, breweries and ethanol plants.

You’ll gain powerful new skills that can be implemented right away:

  1. The mechanics of hedging and the insight to identify potential risks to your operation and how to manage those risks.
  2. Understanding of futures and cash contracts that can help you manage your market risk.
  3. Increased ability to communicate and understand fellow employees, risk managers and brokers/advisers so you can immediately become more effective in your job.
  4. A solid understanding of options as a tool to minimize risk and maximize opportunities.
  5. The ability to make better informed decisions from an increased understanding of the marketplace, its risks and the tools required to manage that risk.
  6. An increased personal comfort level that will enable you to design and implement the strategies needed to manage price risk effectively.

 

THE FACILITATOR

Paul Cassidy,

Owner & President, Mitcon Inc.

Paul is very familiar to the grain industry in western Canada, having spent 30 years trading grains and oilseeds both domestically and internationally and as a procurement and risk manager for a national feed company. He has developed and delivered numerous courses on risk management using futures and options. To date over 4,500 participants, including oilseed producers, cattle feeders, hog producers, various bank and government employees as well as grain industry personnel, have attended Mitcon’s courses. Paul’s most recent accomplishments include authoring an agricultural risk management module for the Canadian Securities Institute and development of a CD-ROM introductory course on Hedging with Futures and Options. He also participated in the redesign of several Winnipeg Commodity Exchange futures contracts and sits on the Winnipeg Commodity Exchange’s Contract Committee.

 

COURSE OUTLINE

Market Risk
Understanding market risk and its various components.   

 

Futures Market
Its development, the futures contract, the margin process, long and short positions, importance of arbitrage, types of orders and managing the futures position.
Terminology of such issues as notice day, delivery day, standardization of the contract, long, short, spreads, rollovers will be explained throughout the course.
Analysis of the new ICE Feed Barley contract.
Hedging
The definition of hedging and the mechanics of hedging using futures. Identification and definition of basis risk and basis trading will be introduced. Discussions on managing the hedge desk and balancing positions will also be introduced.
Basis: The Cash/Futures Price Relationship
A broader, more in-depth discussion of basis, its components and importance to the hedger. Discussions and examples of the factors that can influence basis are also conducted.
Options on Futures
More and more exchanges are introducing options on their futures contracts as they realize the demand from risk managers. Traders are also attracted to options as a risk management and speculative tool.
Options terminology and the individual components of options and their importance will be dealt with in great detail. We will discuss puts, calls, strike prices and premiums.   

 

Using Options
In this section we take the new and improved understanding of options and their applications to managing price risk. Examples will be numerous with hands on application that illustrates the ability to minimize risk while maximizing opportunities. The primary focus in this course is managing price risk through the purchase of options. The riskier, more advanced strategies of “writing options” are discussed in greater detail in the advanced course.   

 

Alternatives to Hedging
This section deals with basis contracts, sales contracts and fixed price forward delivery contracts as alternatives to hedging with futures and options. The risks/rewards and features of each contract are discussed along with a comparison with the associated futures position.   

 

Introduction to Technical Analysis
More and more traders, speculators and fund managers are making use of technical analysis. This section introduces you to some of the basic concepts of technical analysis such as chart patterns, trends, support and resistance, gaps, reversals, moving averages, relative strength index (RSI) and the Moving Average Convergence Divergence (MACD). Learn how to plan your entry and exit points for a strategic hedging plan.   

 

Developing A Marketing or Procurement Plan
Using the tools and techniques learned in the course you will develop objectives and pricing strategies that fit your business’s philosophy and personal comfort level.   

 

 

REGISTRATION

The course fee is CAD$1000.00 (plus GST), which includes all sessions, an extensive course reference manual, coffee breaks and three lunches. Registration is confirmed upon receipt of full payment. Course runs daily from 8:30 AM to 5:00 PM

For additional information and registration for the above course, please contact:

Paul Cassidy

Mitcon Inc.

Cell: (403) 894-1540

Fax: (403) 394-2528

E-mail: info@mitcon.com

Other course locations and dates under different sponsorhip are listed under “Upcoming Events” tab in this section of the web Page.