The Enron Way Enron makes money by trading commodities and other contracts. Enron buys aluminum from the smelter.
Prices move down for aluminum and up for electricity.
Enron pays the smelter to shut down temporarily, buying cheaper aluminum in the market to meet the smelter's commitments. Enron then sells the electricity elsewhere at a higher market price. A small clothing cataloger asks Enron to create a derivative to protect against hot weather that might hurt sales of winter clothes. Enron lays off its risk through a deal with a soft drink maker who benefits from hot weather. The McGraw-Hill Companies Inc. All rights reserved.