In the energy market, it refers to an agreement to buy energy at a certain fixed price during a specified period of time. Hence, the option’s value, which is usually defined within a range of minimum and maximum boundaries, is dependent on the consumption of energy products (such as electricity). The swing option has two types: one-swing option and full-swing option. With the former, a single consumption swing right is bought, while with the other, the number of swing rights is equal to the number of delivery dates within the specified delivery period.
August 20, 2024
