An exchange of obligations to pay each other a defined amount based upon the relative values of a fixed price and specific index. Typically, one party receives a fixed price in exchange for an indexed (escalating) price. Settlement is in cash and at specified times. Example: If party A receives a fixed price and party B receives OPIS low, then party A collects the difference when OPIS is above the fixed price, and party B collects when it is lower.
FREE WEEKLY NEWSLETTER
Learn more practical information like this in the OPIS Weekly Energy Update. It’s a FREE newsletter full of exclusive content, insight and education on the global energy market.