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This book covers a wide variety of subject within the agricultural 🌽🌾commodity sphere with a special emphasis on math explanation behind each of them. Option, volatility, forward curve, valuations, spreads are only few of terms explained and demonstrated trough Agricultural Finance.
The author, Hélyette German being a Professor and holding a PhD in probability you will need a “okay” math level to get most of each subject (which is complete fine, the best physical commodity traders out there just knows +/- buying 5USD, selling 6USD = 1USD in your pocket). That being said, to understand the option pricing/valuation formula, you definitely need to have a solid math education.🤓
I really like the book because the author always tries to link the theory with the reality. It grounds her work a bit more into the “real world” where the other theoretical/educational book only cover the mathematical parts. Each chapter about a specific commodity is always well documented and there is no point made without hard data. Another strong point of the book is the constant long-term point of view, most of the illustration shows at least 10 years of data!
FYI, as a physical trader, you don’t need to know how your option is valuated to use it. You have the price, strike, maturity and go! Only 1/6 of the math is effectively being used by the front office peeps. Of course, there is extra-niche hedge found-like which tries to out-smart the market players by having different valuation tech, (50 brains in the world play that kind of game). For the 99.99% rest of us (normal human being), it’s important to understand the tools at your disposal (or competitor disposal). Making the best-informed decision is what could rely a positive or negative P&L. That’s simple as that.
This book is quite costly and I don’t think it’s well suited for beginners. Once you’ve had some exposure and you are familiar with the basics. I think this book is an important step forward to strengthen your education and comprehension of the market.👨🏻‍🌾
My grade 5/6👏🏻
Damien W.
P.S. If you want to buy the book or read different reviews, click on the link below to land on amazon
