Commodities – Learning Roadmap

Price volatility in crude oil, gold, silver, cotton, sugarcane, wheat and cereals has created an unprecedented opportunity for corporate relationship managers to cross sell treasury products to their institutional, trading, manufacturing and high net worth customers.

What are the prerequisites?

We recommend the following basic courses that will help you become familiar with the terminology and methods used in our models:

  • Correlation
  • Market Risk Metrics
  • Calculating Value at Risk (VaR)
  • Computational Finance: Building Monte Carlo (MC) Simulators in Excel

What topics are covered?

1) A framework for empowering client-facing treasury teams to go out and cross sell high value, high margin trading concepts to clients by educating customers about their exposures and informing them of some of the solutions available to reduce the risk associated with these exposures.

  • Cross Selling Treasury products

This covers:

  • Core concepts such as volatilities, trailing volatilities, interconnections & relationships and trends
  • Specific products and trades such as futures, forwards and options, exotic contracts etc.
  • Trading tools such as analyzing the fundamentals of oil and gold
  • Treasury limits such as stop loss limits, PFE, PSE or counterparty limits
  • Calculating Value at Risk, Pre Settlement Risk (PSR) and Potential Future Exposure (PFE)
  • Linking PFE and PSE to counterparty limits

2) Modeling of commodity prices using various methods.

  • Understanding Crude Oil. A model for dissecting crude oil
  • Crude Oil Mispricing model
  • Relative Gold Price model
  • Understanding Gold! Short Gold or add to your positions? A look at gold silver ratio and relative value argument
  • Monte Carlo Simulator with Historical Returns

This covers:

  • Estimation of the possible direction prices will move in response to certain market drivers.
  • Impact of interrelationships between commodity pairs and between the commodity and other risk classes, and the impact of a break-down in these relationships under times of stress.
  • Market fundamentals, demand for and supply of the commodities, reducing/ increasing spreads between different blends in the case of crude oil, growth of commodity stockpiles, market growth trends in the developed and developing world, etc and how these factors could impact the results of our models.

3) Case studies

  • Real world examples
  • A crude oil specific case study that covers a risk management framework for managing inventory and margin losses of a petrochemical firm. A Value at Risk based approach is utilized to determine acceptable levels of risk for the firm which is then used in devising a plan for the implementation and management of an appropriate control structure.

Related Video Courses

  • Quant Crash Course
  • Calculating VaR (Value at Risk) using VCV and Historical Simulation
  • Setting Value at Risk (VaR), Stop Loss, Pre Settlement (PSR) and Counterparty Limits

Related Book/PDF Files

  • Understanding Commodities Risk
  • Derivatives – Crash Course
  • Calculating VaR – includes case study

Related EXCEL Fles

  • Crude Oil Mispricing Model
  • Relative Gold Price Model
  • Monte Carlo Simulator with Historical Returns
  • Monte Carlo Simulation – Commodity – Example
  • Calculating VaR – EXCEL Example
  • Portfolio VaR – EXCEL Example
  • Portfolio Risk Metrics Example


Random Testimonial

  • ~ Corporate Training Testimonials

    "A most amazing training - hands down the best, most useful, and most relevant I had during my tenure. Simply put, I loved it and will continue to build on the models. 

    Financial Modeling Course Participant
    FGB Training Academy, 
    First Gulf Bank, Abu Dhabi, UAE


    I have attended a number of training courses conducted by Alchemy technologies. Broadly, the areas covered have been Financial Risk Management aspects, Basel II implementation in Pakistan, as well as product knowledge for relatively new products in the our market for instance Financial Derivatives. As trainers, Mr. Jawwad Farid and his team bring in a wealth of conceptual knowledge entwined with their own professional experiences, adapting and honing it to our local market needs. The training courses are very informative and are delivered in a witty and energetic manner. The learning needs of the participants are kept in focus, and they are kept involved by interactive discussions and queries. Personally, I have always left these sessions with a much better understanding and grasp over the subjects delivered, which has helped me professionally.”

    Senior Manager & Team Leader
    Treasury Middle Office
    Habib Bank Limited


    “Jawwad Farid has admirably led the training piece on the Treasury side covering Treasury risk, Treausury products, Derivatives (basic & Advanced), Fixed income securities (Basic & Advanced) and ALM training modules. Jawwad in our opinion is an “Outstanding Senior Trainer” who has deep subject matter knowledge and an uncanny ability to keep the participants engaged in the training process. So far our clients have expressed maximum level of satisfaction in Jawwad’s capability to deliver high value training programs, that have tangibly enhanced their staff’s skill sets.

    Based on our direct more than satisfactory experience, Jawwad’s otherwise exceptional track record on the training side with over 90 technical skill building courses in South Asia, Middle Eastern and Far Easterm markets, we have no hesitation in strongly recommending Jawwad Farid for the training that for participants based out of Malaysia or the adjoining Far Eastern Markets.”

    Mohammad Nasr Ullah
    Principal Consultant
    Consultnomics, FZE


    I have loved each and every workshop from Alchemy. The workshops are extremely helpful in removing queries about Derivatives Pricing, Basel & Regulatory issues. I feel attending the workshops have added value to my knowledge and expertise. Moreover, the instructor is extremely knowledgeable on the subject area and ensures that each candidate returns with similar knowledge and expertise.

    Senior Vice President
    Allied Bank"

  • Read more testimonials »