Speculation requires vigilance in monitoring the position. If it isn’t performing as expected, then the prudent step might be to close the position.

Hedging is the easiest way to use financial swaps, but we can also use swaps to capture an opportunity that may be present in the market, says Mark Rachal of Cost Management Solutions.

Financial swaps are risk management tools. When used properly, they are true hedges that provide predictable results for supply purchases.

Mark Rachal explains the process of delivering physical supply to the customer and settling financial swaps to show how the two work together.

Learn how a propane retailer can use a financial swap to provide a fixed price to a customer for months or even years in advance.

Retailers use swaps to capture opportunities, turn unknown future prices into knowns and maintain flexibility to adjust positions when conditions change.

Mark Rachal of Cost Management Solutions explores some of the advantages of the propane swap market in price risk management.