April 2014
Intermediate to advanced
342 pages
8h 5m
English
Content preview from Commodity Option Pricing: A Practitioner's Guide
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
O’Reilly covers everything we've got, with content to help us build a world-class technology community, upgrade the capabilities and competencies of our teams, and improve overall team performance as well as their engagement.I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.
6 Energy II – Refined Products
Whereas coal and natural gas can be consumed directly, crude oil is a complex mixture of different hydrocarbons, and not generally used in its raw form.1 The process of extracting different types of hydrocarbons of similar molecular weights is known as “cracking” and is how we arrive at the refined oil products that end users like, as all of us take for granted in our everyday lives, such as gasoline/petrol,2 diesel, heating oil, jet fuel, etc. Many people wonder why the price of fuel at the pump doesn’t rise (or fall!) in line with crude oil prices – the answer to this is that only about half of the retail price of a gallon of gasoline in the USA is directly linked to the cost of the crude oil required to make it; 20% comes from taxes, about 20% from the cost of the refining process and the remaining 10% or so comes from distribution and marketing. The proportion of taxes is certainly higher in various other countries.
While the financial market for crude oil completely dominates the market for refined oil products, some commentators3 predict that futures and options on refined oil products will increase in importance between 2013 and 2018.
In this chapter, we describe the refined oil products that are typically extracted from crude oil, and relate these to the financial markets that exist on these products. We discuss what makes these behave differently from crude oil, and finally we mention the financial products that relate refined oil products ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Read now
Unlock full access
More than 5,000 organizations count on O’Reilly
O’Reilly covers everything we've got, with content to help us build a world-class technology community, upgrade the capabilities and competencies of our teams, and improve overall team performance as well as their engagement.Julian F.
I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.Addison B.
I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.Amir M.
I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.