Gas Hedge Calculator

Idea:

Assuming demand for natural gas increases in the winter season due to heating,

we can try to exploit the cyclical behaviour anticipating the trend, in order to generate a profit that will offset the later season higher costs, granting the price on the gas bill at often cheaper prices, this can reduce the gas bill by a lot (this year strategy reduced the gas bill by about 28%.

The hedge will only offset the gas consumption cost, not the transport cost and taxes.

Execution:

There are many markets for Natural Gas, in order to choose which market is best fit for the purpose, there are a few simple considerations to be made:

• geography: where do you live? where does your provider buy gas from?

• financial instruments: what are available? (ETFs, Futures, Options....)

• related costs:

Example

Mario lives in Italy and consumes about 4'800[Smc] of gas,

the Italian gas is PSV, since he was unable to access instruments on that underlying he opted for the most correlated one, TTF which is Dutch gas, good for most of Europe,

in september TTF costs 20€/[MWh], in march it touched 40€/[MWh].

reducing the gas bill by 28% !!!