Do you have a physical position in electricity or gas and sell a large proportion of your volumes on the spot market? Do you want to be ready for rising prices, while profiting from price reductions? Do you want to make the timing of your hedges independent of the physical purchase?
Benefits for you
Protect yourself from rising prices: Benefit from an Asian call option traded by us as a hedge against rising spot prices, thus protecting your own budget.
And benefit from falling prices, too: Because although you are protected against rising prices, you will participate in falling electricity or gas prices. To benefit from this hedging, a premium is payable for the option at the time of the transaction.
Automatic execution of an option settled in Asia if it is in the money, which expires automatically if it is out of the money. It is neither necessary to actively exercise the option at a certain point in time, nor decide to then declare the option on the basis of the price. This means that the declaration time can never be missed.
Structure of the option
An Asian call option offers a hedge against rising spot prices. After payment of the premium, you as the buyer of the option automatically gain the right to receive the energy from us at no more than the fixed strike price. At best, the automatically triggered option is not exercised because the average price has not exceeded the strike price during the fixed period. This enables you to record revenues due to lower purchase prices. If you want to hedge against falling prices based on your portfolio, you can also hedge up to a defined lower limit with a put option. Other alternatives are also possible, such as the combination of call and put options, some of which do not require option payments (zero-cost collar).
Products and Maturities
We offer options settled in Asia for both electricity and gas. Maturities can be in months, quarters or years. Quotation is offered for Germany (DE baseload for electricity and NCG/GPL for gas) and for the Netherlands (NL baseload for electricity and TTF for gas).
An “Asian settled” call option is a financial instrument that is paid out if the average of the spot fixings of the energy, e.g. of one month, exceeds the strike price. The payout corresponds to the price difference between the average spot fixing and the fixed strike price for the contract volume and is calculated automatically.