Market focus: derivatives - Risky business

Market focus - derivatives

Free-market energy prices are among the most volatile of all commodities, encouraging consumers to find ways of protecting their budgets. Risk management – involving hedging with derivatives, such as futures, options, over-the-counter (OTC) forwards and swaps – is becoming a critical means of reducing exposure to fluctuating market prices. When used prudently, derivatives are effective tools for isolating financial risk and reducing exposure to risk. Derivative contracts transfer