IMOS - FFA/Option Trade

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On the FFA/Option Trade form, you can capture the basic information of an FFA or an option. The Veson IMOS Platform captures four types of options: Buy and Sell of Call and Put Options.

• A CALL option gives the holder of the option the right to buy at the strike price.

• A PUT option gives the holder of the option the right to sell at the strike price.

FFA contracts are valued against the quoted forward rates for the route underlying the trade. FFA Options are not being automatically valued against the underlying routes. Instead, you can create a Market for Freight Options in which the Option Symbols can be quoted. Each FFA Option contract will have a unique Option Symbol automatically generated. On the Market Data form, the quoted values of the trades can be recorded for each Option Symbol.

FFA/Option List

The FFA/Option List includes all FFA/Option Trades that you have the right to view. 

On the Trading menu 

• You can select multiple Commodity/Options and confirm them at once by clicking the Confirm trade(s) link.

FFA/Option Trade

Note: To edit FFA/Option Trades, you must have the Record Trades Module Right selected.

To view an existing FFA/Option Trade, on the FFA/Option List, click its row or Trade ID link.

To create a new FFA/Option Trade, do one of the following:

• On the FFA/Option List, click +.

• On the Trading menu 

  

  , under Trades, click FFA/Option.

As with any other details view, you can navigate to a different record by clicking its card or return to the list by clicking its Name.

You can use tools on the toolbar to create, find, save, copy, or delete records.

• To copy an FFA, click 

  

  . Enter the number of copies and then click Create. Edit line items for the copies as needed and then click OK.

Enter contract details.

• Statuses:

  • Pending: The trade has been created. Contracts with a Pending status show as position in the Trading P&L Summary.

  • Opportunity: The trade can be included in the Trading Sensitivity Analysis to see how the P&L will look with this trade added.

  • Confirmed: Contracts with a Confirmed status appear in the Trading P&L Summary.
    Note: The Broker Confirmation Number is required to confirm a trade; it changes the Status to Confirmed. Someone with the Broker Confirmation Module Right selected in Security must enter the Broker Confirmation Number to confirm the trade and save it. Only paper trades that are confirmed can be settled for matured periods.

  • Partially Settled: The trade is partially settled.

  • Settled: The trade is fully settled.

• Reference: To edit this field, you must have the Reference Module Right selected in Security, under Trading.

• Settlement: For Period Average:

  • The period must be less than or equal to one month.

  • The settlement rate will be the forward rate for the month until the period is realized; then the settlement is the average of all spot rates in the period.

  • Early settlement is not allowed, since the true settlement rate is not available until the period is fully realized.

  • When using Realize Paper Trade Days Through the Month, the unrealized portion of the trade will use the forward rate for the month, and the realized portion will use an average of the spot rates in the realized period.

The grid on the bottom of the form populates with the Periods, the Market Rates, the Date that the Market Rate is from (Source), and the P&L (Exposure).

Exposure Tab

When you first enter a trade, periods in the future appear on the Exposure tab.

Settlement Tab

After a particular period of the trade has matured and the settlement rate has become available, that period moves to the Settlement tab.

The Trade must be refreshed for the periods to appear on the correct tab. To refresh, close the trade and reopen it.

These conditions both need to be fulfilled for this to happen:

• The period must have matured, that is, the month must be in the past, relative to the system date.

• The Settlement rate must be available; the Price field (Entire Month, Last 7 days, Last 10 days) on the Market Data form for a day during the trade's Settlement month must be available.
  If Entire Month is selected Entire Month values need to be imported into IMOS. If the Entire Month value for the route is not in IMOS the status of the trade will not be able to be set to realized. 

Months Tab

Monthly information appears on the Months tab.

Linked Trades Tab

Note: Configuration flags CFGLinkPapertoPaper and CFGLinkedTradeTypes must be enabled.

On the Linked Trades tab of each paper trade form, the Linked Trades grid enables you to link this trade to other paper and physical trades.

The grid at the top of the tab enables you to capture any paper trades that the contract is using to hedge. The Contracts grid enables you to capture any trades that are using this contract as a hedge.

Example: If you have an FFA trade, and there is bunker exposure associated with the calculation that you would want to hedge, then you would use the top grid and select a Bunker Swap. If you have a Cargo contract that has freight exposure and you want to hedge to an FFA, then this Cargo contract would show up in the Contracts grid of that FFA.

On either grid, you can:

• Add New Row: To add a linked trade, add a new row and then enter the trade information.

• Right-click a line item and then click:

  • See Trade Details: Opens the trade details

  • Insert: Inserts a row for a new linked trade

  • Delete: Deletes the link to the trade

Bunker Exposure Tab

As a trader booking FFAs on either $/ton or World Scale routes, you can manage exposure to the bunkers that are taken into account by these routes. The Bunker Exposure tab enables you to capture bunker tons, bunker contract rate, and bunker market symbol, so that proper hedging can be completed against the contracts. This bunker exposure appears on the Trading P&L Summary and Trade Details list.

To enable the Bunker Exposure tab, select an Index/Route where the Trade Route Unit is $/ton or World Scale.

For each row in this grid, the Qty/Month field represents the tonnage of bunker exposure for the specified fuel type per month of the contract. For example, if the Qty/Month is 100.00, the total exposure for a 12-month contract would be 1,200.00.

The Bunker Exposure appears on the Trading P&L Summary under Bunker Exposure. In addition, TC Exposure shows the exposure associated with the TC component of the FFA, and Net P&L shows the Net Exposure on the trade, taking into account both Bunker and TC Exposure.

Note: FFAs can be linked to both Time Charter In and Time Charter Out contracts. However, FFAs do not affect the Trading P&L Summary, Trade Details list, or Voyage P&L when linked to a Time Charter In.