Real options are an accepted risk management technique in the energy sector. Kevin Foster takes a look at how are they being used and what factors are affecting their development and implementation
More Options articles
The influences which determine fluctuations on the Exchangeare innumerable; past, present, and even discountedfuture events are reflected in market price, butoften show no apparent relation to price changes. Besidesthe somewhat natural causes of price...
As our readers can attest, liquidity risk can be particularly acute in OTC derivatives markets.In the second of our two themed papers, Andrey Krakovsky shows how the Black-Scholesformula can be modified, allowing options on illiquid underlyings to be...
While options traders have gravitated towards stochastic volatility to maintain riskneutrality and market completeness, risk managers have no such obligation. Here,Terry Lyons and Adam T Smith take market incompleteness as a starting point inallocating...
In recent years, the study of options markets has polarised into two camps: heuristictrading rules on one side, and theoretically consistent but more unwieldy models on theother. Here, Emanuel Derman attempts to bridge the divide by identifying severalregimes...
In response to industry fears of a collateral crunch, regulators have revised the proposed rules on margining for uncleared over-the-counter (OTC) derivatives.You can find out more by downloading this white paper here.
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