Power/Energy¶
Goal: - Understand the energy / power stack - Distinguish between the different sources of energy and their use cases - Understand the difference between geographical regions and their energy mix (EU, Japan, US, China, etc.)
Role: Junior Trading Analyst
Power Stack: It is the electricity that powers our energy grid. This comes from Oil, Gas, Coal, Nuclear and Renewable sources.
Indexes¶
Henry Hub: It is the reference price for U.S. natural gas and the foundation for NYMEX futures contracts traded globally. Cheapest due to US producing the most natural gas. Most stable. Traded on HL as NATGAS-USDC (currently trading NQU26, september 2026 contract)
Title Transfer Facility (TTF): The virtual trading point for natural gas in the Netherlands. It is the primary liquid benchmark for European wholesale gas, quoted in €/MWh. Highest liquidity, often used for hedging and as a benchmark. When TTF is trading well above JKM, LNG cargoes sail west to Europe (sell to highest bidder). When JKM is higher, they head east to Asia. Volatile because EU is dependent on imports and prone to geopolitical risks.
Japan Korea Marker (JKM): S&P Global’s daily spot price assessment for spot LNG cargoes delivered ex-ship into Northeast Asia (Japan, South Korea, China, and Taiwan). Limited liquidity and used as price signal. Seasonal, spikes in cold winters. Seasonal due to surges in winter and fall in summer.
Notes: JKM and TTF correlation spiking because of EU demand for LNG after Russia-Ukraine war. TTF and Henry Hub starting to decouple due to softening of EU demand and tightening of US LNG exports.
Japan Crude Cocktail (JCC): The average customs-cleared price of crude oil imported into Japan. It serves as the historic oil-indexation baseline for long-term LNG contracts across Asia.
TFU: The financial futures contract ticker for Dutch TTF natural gas converted and priced in USD per million British thermal units ($/MMBtu).
Market Dynamics and Trading¶
Japan Power Stack¶
Position & risk monitoring: Track daily P&L, VaR, delta, and drawdown limits across the desk's books; Market data & curve maintenance: Maintain and mark forward curves live pricing tool for Power financial derivatives, JCC, JKM, TTF, and TFU references. Trade support: Book and reconcile trades; ensure accurate entry of counterparty, volume, tenor, and pricing formula details. Auction preparation: Support participation in auction or ad-hoc tenders — running simulation trades, tracking allocation results, monitoring settlement timing and reconciliation of PnL and risk measures. Reporting: Prepare daily/weekly risk and P&L reports. Analysis: Assist senior traders in analyzing location spreads, time spreads, spark spreads, and cross-market arbitrage opportunities. Input and maintaining fundamental financial models, simulation models, and data algorithms. Coordinate with global analytics team on model update and information sharing. Ad hoc analysis: Support senior traders with scenario analysis, hedge ratio calculations, and margin/lock-in economics for structured deals.