Shipping Derivatives & Forward Freight Agreements (FFAs)

Dates:

28, 30/04 & 05, 07, 08/05

Duration:

5 Sessions

Hours:

19:00 – 21:30 (GMT+3)

Fees:

500 EUR

(Including tuition fees & reading material)

ICS Members are eligible to a discount 20% on all HMC Professional Maritime Seminars

This seminar provides a comprehensive understanding of shipping derivatives and Forward Freight Agreements (FFAs), focusing on their theoretical foundations and practical applications in risk management and freight market trading. Participants will explore the use of derivatives to hedge freight market risks, analyze pricing models, and understand how FFAs and freight options function within the shipping industry.

SPECIFIC AREAS COVERED

Module 1: Introduction to Financial Derivatives & Risk Management

Introduction to the Course

Overview of the seminar and key learning objectives
Fundamental concepts of risk management in shipping
Understanding the risk-return relationship and key financial risks
Overview of financial markets and derivative products

Introduction to Derivatives: Futures & Forwards

Types of derivative instruments
Time value of money principles
Forward & future contracts: key concepts and mechanics
Mark-to-market valuation of futures contracts
Role and function of clearing houses

Advanced Futures & Forwards Concepts

Categories and series of futures contracts
Understanding future contract pricing and basis
Cash vs. physical settlement
Futures hedging strategies and practical examples
Key differences between futures and forward contracts

Option Contracts

Introduction to options and their applications
Options payoffs and pricing fundamentals
Key factors affecting option prices
Put-call parity and its significance
Black-Scholes pricing model and implied volatility
Implied volatility smile, term structure, and model limitations
Option Greeks and their impact on pricing

Module 2: Shipping Derivatives & Forward Freight Agreements (FFAs)

Introduction to Shipping Indices

Overview of the shipping industry and freight contract types
Cost structures under different contract types
Formation of spot freight rates and time charter equivalent (TCE)
Shipping indices and their role in derivatives trading
Introduction to the Baltic Exchange and its role in the market
Key shipping indices and tradeable derivative routes

The Theory of Shipping Derivatives & FFAs

Understanding shipping derivatives and Forward Freight Agreements (FFAs)
Key uses of FFAs in risk management and trading
How FFA trades are executed and settled
Baltic Forward Assessments and mark-to-market valuation of FFAs
FFA settlement conventions and pricing quotations
Understanding FFA forward curves and factors influencing pricing
Liquidity considerations and regulatory aspects of the FFA market
Advantages and challenges of using FFAs in shipping

Practical Applications of FFAs in Shipping

Hedging vs. speculative trading strategies using FFAs
Case studies:
- Simple FFA sell trade
- Tanker hedging strategies
- Hedging Panamax and trip charter routes with FFAs
- Managing a series of voyage risks with FFAs
- Time charter hedging techniques
Overview of freight option contracts and liquidity considerations
Introduction to Asian options and pricing formulas
Freight options trading strategies and real-world examples
Freight options quotation and technical aspects

Conclusions & Special Topics

Interpreting FFA forward curves and their significance
Importance of constant maturity curves in freight rate analysis
Selection of appropriate hedging instruments
Tanker hedge ratio calculation methodologies
Freight rate statistics and risk management best practices

Download a Brochure

Apply for the Seminar here

IDEAL FOR

✔ Shipping professionals (charterers, shipowners, operators, brokers)
✔ Financial analysts and risk managers in maritime and commodity trading
✔ Investors and traders interested in the shipping derivatives market
✔ Maritime law and finance professionals
✔ Students and early-career professionals seeking specialized knowledge in shipping risk management

Tutors

Dr Kostas Theodoropoulos
Senior Portfolio Risk Manager

Kostas Theodoropoulos is a highly experienced Financial Portfolio Manager Manager with 17+ years of experience managing financial derivatives and fixed-income portfolios, as well as FFA positions, particularly in the dry bulk sector. He holds the position of Portfolio Manager at a well established shipping company. He has a strong background in quantitative modeling, structured products, and risk management, having held key positions at Eurobank and HSBC.
Kostas holds a Ph.D. in Shipping Derivatives from the University of Piraeus, specializing in financial derivatives for risk management in the shipping industry. He has been designated as a Professional Risk Manager (PRMIA) since 2015.