Research on coal price risk management methods based on option clauses in power trading contracts

Affected by the international situation, the coal supply situation is very tense and the price fluctuates drastically, and a large number of power enterprises suffer from substantial losses, which seriously threatens the security of China’s power supply. In order to effectively alleviate the conflict between coal and electricity and increase the ways for market players to hedge the risk of coal price, this paper proposes a trading model of introducing option clauses in medium and long-term contracts of electricity, drawing on the concept of option trading, to provide reference for the market to manage the risk of coal price, and verifies the feasibility and effectiveness of the method through arithmetic examples.