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.
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