"So, what would you say, ya do here?"

I haven't posted on this in a long time, so all my fans can rejoice. Kidding. I've been caught up in summer classes and moving to south Florida and haven't had a chance to make an update. Someone wanted me to discuss what it is that I do at work, so this will be a brief discussion of that.

As a quantitative analyst for an energy firm, my job (as far as I know thus far, it has only been a week) is to price swaps and forward contracts for electricity load. Electricity is a commodity, and we provide wholesale electricity to utility companies and other such entities all around the nation. They have a demand for electricity in the future and we (along with other firms) bid to provide them with this at that time, for a profit. In exchange, we take on their demand needs, which of course could fluctuate heavily, hence taking on their risk. Thus, this is a swap where one party agrees to deliver a certain commodity at a fixed price now while taking on the counterparty's risk in the future delivery period. We then hedge this risk that has now become our own.

Doing all this requires elegant computer models to find appropriate prices, risk profiles, and demand, among other things for such an agreement between the counterparties. My job at the moment is to apply and manipulate these models using historical data to provide the necessary analytics for these agreements. In my first week on the trading floor, I've enjoyed the work and learned a considerable amount. I'll continue to update as I learn more!