Markets are complex social systems, flooded with uncertainty. This book addresses how market participants in the commodity and energy markets cope with unpredictability in pricing, what the consequences are of intricacy and variability, and what requirements there are to manage entanglement and precariousness. Attention is also given to the required characteristics of market professionals and what is expected of them to flourish in the business.

This book covers the fundamentals of interest rates and currency exchange rates. In addition, attention is given to exposures that corporates may have in these fields and how these risks can be hedged with swaps. Analogously, commodity and energy exposures are covered, as well as the hedging these of positions with commodity swaps. Attention is also given to the pricing and valuation of swap agreements and how those contracts are entered into. In addition, knowledge is provided about settlement processes and procedures. Both cash settlement and physical delivery are set out. Finally, it is explained what swaptions concern and how these tools help mitigate risk.

This book addresses the basic questions regarding commodity and energy trading. Why do market participants conclude transactions? Where do they do this? When? And how? Besides, attention is given to the organisational structure of trading organisations, as well as the application of mandates and limit settings. Meanwhile, related concepts, processes and related terminology are covered.

Parties in the commodity and energy markets enter into spread positions. Both hedgers and investors set up strategies to effectuate their specific desires. Hedgers aim to secure future margins relating to their physical assets, while investors take a position based on a view, aiming to yield a return.
In this book it is explained what, when, where and how, while related terminology is set out. It is also covered what the related exposures are and how margining takes place to manage this risk.