Part Three: Understanding Spreads Helps Assess Hedging Risks
Spreads help "tell a commodity’s story" sharing important information about that commodity that can help a business assess their hedging risks.
Part Two: Spreads
In our first Hedging 201 post we looked at how the structure of a forward curve helps tell a commodity’s story. Now, we want to explore the role a spread plays in helping to interpret that story. What is a spread, and what do they do?
Part One: Forward Curve Structure
In Hedging 201 we would like to take things a little farther, exploring important topics like understanding market spreads and how using different financial tools can benefit your business. The first topic we will explore is – forward curve structure.
Part Eight: Conclusion & an Introduction
In our Hedging 101 series, our goals were to provide information about hedging in a way that "Kept Things Simple", while also providing the building blocks to understand basic hedging concepts in action. This post reviews some terms and concepts we’ve covered in this series, and gives a brief overview of where we want to go next with hedging!
Part Seven: Financial Swaps
Hedging 101 has discussed many different strategies to protect against risk, including prebuy, fixed price products, and futures contracts. In this post, we want to look at how financial swaps can reduce risk when a fuel distributor is using a financial hub product.
Part Six – Futures Contracts
Hedging 101 has discussed using different strategies like prebuy and fixed price products to protect against risk. In this post, we want to talk about another strategy – futures contracts. Come with us as we look at how using a financial hub product plus basis can help you navigate some of the risks of the fuel industry.
Part Five: Risk Policies
Hedging 101 has defined basic terms and given examples of hedging using different tools. In this post, we take a quick detour to talk about the not so glamorous, but necessary, part of hedging – risk policies.
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We enjoy working with Twin Feathers. Great people who have helped our business!
Will
Twin Feathers has taken the burden of the everyday supply logistics off our plate and allowed us to focus on our operations in the critical times of the year. They have educated our team along the way and helped us brainstorm options/risks that fit our business model. Twin Feathers has allowed the Tevis organization to explore opportunities within the supply and hedging arena that we would not have been exposed to without the relationship.
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They not only taught us how to plan and diversify our supply, but also new ways to protect the price. They have been great at negotiating supply deals and putting plans in place to know we will be secure when the market is not. I am confident that if things get tight we will be in a better position than our competitors.
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Twin Feathers has partnered with energy firms since 1998 to provide transparent, value-driven commodity market advisory services.
