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  • July 25, 2021
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Dark Spread Option

An option on the dark spread, i.e., on the gross margin from electricity generated using coal. More specifically, this option gives the right, but not the obligation, to the buyer (holder) to purchase the price difference (the dark spread) between electricity and coal. If the spread is positive, the option will be in the money, and it would be worthwhile to exercise it. If the spread is negative, the option will expire worthless.


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