A measurement of the heat equivalent to one million BTUs
New York Mercantile Exchange
12 Month Strip :
Contract for 12 months of natural gas futures based on NYMEX natural gas
Firm Physical: The transaction is guaranteed physical
natural gas delivery to a specific point for a specific maturity (time) for a
specific fixed price or indexed price. Transaction locations are across the
United States and Canada.
EFP: Exchange for Physical is a transaction using the New
York Mercantile Exchange (NYMEX) natural gas contract.
Trader brokers the location for physical delivery and the differential
to the NYMEX. The counterparties exchange the physical product for NYMEX
natural gas contracts to offset each counterparties� exposure.
Basis Swaps / Fixed Price Pipeline Swaps: The derivatives
are brokered using natural gas locations across the US & Canada.
Trader primarily focus on basis swaps in which
counterparties agree on the differential to the NYMEX natural gas contract for
a specific trading point location. The same transaction can replace the
differential with a fixed price, which is called a fixed price pipeline swap.
The transactions are primarily based on indexes published in Gas Daily,
Natural Gas Intelligence, Canadian Gas Price Reporter and Inside FERC
(Platts / McGraw Hill). They
are financial swaps and are currently in the over-the-counter (OTC) market
only which means they are not regulated. The transactions settle monthly
against the specified index.
Gas Daily Swaps (Swing Swaps): These
derivatives are based on the Gas Daily Publication from
Platts / McGraw Hill.
Gas Daily publishes natural gas prices for each day of trading for
approximately 70 locations across the United States and Canada. The
derivatives can be fixed price or indexed price based on a specific location
settling daily against the Gas Daily index for that specific location. These
transactions can be financial or physical in nature and are OTC only.
These derivatives are based on the NYMEX
contract. They are fixed price transactions for a specific maturity and they
settle against the last day settlement of the NYMEX natural gas contract for
each month. They are financial transactions only and are in the OTC market.
Transaction maturities range from one month forward to ten years.
NYMEX Options: These derivatives are also based on the
NYMEX natural gas contract and are a close sister to NYMEX swaps. The options
are financial transactions. Traders broker options in the OTC market only.
Basis / Pipeline Options: These derivatives are based on
various pipeline locations across the United States and Canada. They are
options based on either the natural gas basis for a particular location or a
fixed price for that location. These are financial in nature and are currently
in the OTC market only.
" Pigs Get Fat But Hogs Get
Slaughtered ! "