Fundamentals of Trading Energy Futures and Options [Hardcover]

Steven Errera (Author), Stewart L. Brown (Author)

Book Description

ISBN-10: 0878148361 | ISBN-13: 978-0878148363 | Publication Date: February 1, 2002 | Edition: 2nd

In todayÂ’s changing political and economic environment, it is increasingly important that companies learn to properly use various trading instruments to protect themselves against price volatility. Since the first successful energy futures contract was introduced almost a quarter century ago, trading in energy futures and options has played an important role in hedging against fluctuations in the price of petroleum products, crude oil, natural gas, propane, electricity, and most recently, coal.

In this 2nd edition of their best-selling primer, authors Steven Errera and Stewart L. Brown explain how exchange traded futures and options markets work, and how companies can successfully use the markets in their overall strategy to increase profitability. They cover everything from market mechanics, hedging, spread trading, and technical trading to the history and growth of the markets. Also included in an extensive appendix detailing contract specifications for thirteen energy futures/options contracts.

Editorial Reviews

About the Author

Steven Errera, former president of Energy Futures, Inc., is noted in his field as a lecturer and writer having contributed articles to many economic and energy-related publications. He is a former vice president of the New York Mercantile Exchange where he was responsible for writing and marketing its No. 2 Heating Oil Futures Contract.

Stewart L. Brown is a chartered financial analyst and professor of finance at Florida State University in Tallahassee. He has published numerous articles in financial and economic journals.

Product Details

• Hardcover: 247 pages
• Publisher: Pennwell Pub; 2nd edition (February 1, 2002)
• Language: English
• ISBN-10: 0878148361
• ISBN-13: 978-0878148363
• Product Dimensions: 9.3 x 6.1 x 0.8 inches
• Shipping Weight: 13.6 ounces (View shipping rates and policies)
• Average Customer Review: 3.7 out of 5 stars  See all reviews (15 customer reviews)
• Amazon Best Sellers Rank: #146,065 in Books (See Top 100 in Books)
  • #66 in Books > Business & Investing > Industries & Professions > Oil & Energy

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Customer Reviews

Most Helpful Customer Reviews

33 of 33 people found the following review helpful:

3.0 out of 5 stars Good on the basics of energy futures trading., September 7, 1999

By A Customer

This review is from: Fundamentals of Trading Energy Futures & Options (Hardcover)

The authors present the basics of futures trading in relation to the energy market. The book does not assume any previous familiarity with the commodities.

Unlike many stock market type books, the authors do not suggest or recommend trading in energy futures. The book presents the mechanics of the market and strategies used by traders.

Specific to the energy market are spreads (heating oil vs gasoline, crack spreads, spark spreads, heating oil vs gas-oil spreads, NYMEX vs IPE spreads and frac spreads). All clearly explained and very interesting. Also, hedging strategies including arbitrage and strip hedging are reviewed.

Options on futures are explained in a generic sense (nothing specific to the energy futures) except for crack spread options trading.

Technical analysis is briefly discussed (11 pages in total). The authors are skeptical of technical analysis - at least in a pure form without other information.

The final chapter deals with the economic implications of energy futures to offset potential losses or lock in profits due to changing oil prices.

The book is a good primer on energy futures, and as there are few books available specifically addressing energy futures, I can recommend it.

However, the book is strictly limited to energy commodities. The energy indexes in the equity market (symbols XOI and XNG) and the SPDR options are beyond the scope of the book. There is also no discussion of online information sources and online commodity brokers. Also, there is little discussion of the rewards and risks involved in futures/ options trading. The bibliography is limited to three books.

17 of 17 people found the following review helpful:

4.0 out of 5 stars Energy Futures Explained, October 14, 1999

By A Customer

This review is from: Fundamentals of Trading Energy Futures & Options (Hardcover)

Although this book is focused on energy futures, the authors provide an outstanding overview of the fundamentals of futures trading. However, the value of the book is its explanation of how energy futures are traded. Technical and fundamentals are reviewed with the emphasis of how they are used in the unique setting of the energy industry. I particularly enjoyed the chapter on the history and growth of the energy contract. The chapter on hedging will be of great intest to those in the energy industry.

12 of 12 people found the following review helpful:

5.0 out of 5 stars Very Good Primer, June 27, 2003

By 

Consumer "PR" (FL) - See all my reviews

Amazon Verified Purchase

This review is from: Fundamentals of Trading Energy Futures and Options (Hardcover)

This is an excellent and invaluable learning tool. It is helpful to have some financial experience, namely understanding some of the terms like call and put,etc, so that you may spend more time focusing on the concepts, but not absolutely necessary.
The book is logically organized to start with an overview of the futures market,followed by an overview of futures, generalized hedging, and options. All topics are related to energy commodities with easy to understand explanations. Relevant details relating to the energy market (definitions of spark spreads, inter-exchange hedging strategies, etc) are included.
Although I could not go into the market and trade commodities after reading this book, I could understand the overall concept of hedging energy futures and options and this serves as an excellent primer to the next level.
I would say that this book is at about the college senior level, easy on the math and not heavy on modeling. I would recommend it for the beginning MBA student but not at a PHD level.