Coal – Quality Spread

Short description

Trade the coal quality spread.

Capacity

You act in the role of a market participant who applies spread trading, correlation trading and/or statistical arbitrage.
You act in the capacity of aggressor.

Tasks

Analyse the price differential between the two products, its minimum and maximum and the volatility of the quality spread.

Furthermore, your task is to trade the quality spread; setup the spread (a long versus short strategy between different grades) and liquidate it when financially suitable.

Analyse your financial performance.
Watch the Unrealised Result of an open position (“P/L-U”).
See the Realised Result of a closed position (“P/L-R”).

Check your Value at Risk (VaR) upon opening a position in one leg (contract), either long or short, and see the exposure (VaR) going down (risk mitigation) when you setup an opposing position (long versus short) in the other leg (contract).

Conclusion

At the end of the simulation, analyse your performance. See what you have done and when you have done this and whether it could have been optimised. This way, you learn and optimise your competences.

 

Our Labels

Entrima and Market Abuse Centre (MAC) are the two labels we operate to provide learning services for professionals in the commodity & energy markets.
 
 


Content & Context

Entrima’s mission is to transfer knowledge regarding the business, controls & operations of parties in (or relating to) the wholesale markets.

www.entrima.org


Conduct & Culture

MAC’s mission is to facilitate the prevention & detection of misconduct and to foster proper behaviour in organisations. This is achieved via training, periodic updates and increased awareness.

www.marketabusecentre.com