Derivative Instruments

Forward freight agreements and bunker swaps

The Company trades in forward freight agreements (“FFAs”) and bunker swaps, with the objective of utilizing this market as economic hedging instruments that reduce the risk of specific vessels to changes in the freight market. The Company’s FFAs and bunker swaps have not qualified for hedge accounting treatment. As such, unrealized and realized gains are recognized as a component of other expense in the Condensed Consolidated Statement of Operations and Other current assets and Fair value of derivatives in the Condensed Consolidated Balance Sheets. Derivatives are considered to be Level 2 instruments in the fair value hierarchy.

The effect of non-designated derivative instruments on the condensed consolidated statements of operations and balance sheets is as follows:



		For the Three Months Ended					For the Six Months Ended
Derivatives not designated as hedging instruments	Location of loss/(gain) recognized	June 30, 2019		June 30, 2018			June 30, 2019			June 30, 2018
FFAs	Other expense/(income)	$	39,296	$	36,625		$	(1,130,993	)	$	82,432
Bunker Swaps	Other expense/(income)	123,809		(776,981		)	(1,144,157		)	(722,409		)
Total		$	163,105	$	(740,356	)	$	(2,275,150	)	$	(639,977	)



Derivatives not designated as hedging instruments	Balance Sheet location	June 30, 2019		December 31, 2018
FFAs - Unrealized gain	Other current assets	$	1,545,840	$	669,240
Bunker Swaps - Unrealized gain	Other current assets	211,357		—
Bunker Swaps - Unrealized loss	Fair value of derivatives	65,850		929,313

Cash Collateral Disclosures

The Company does not offset fair value amounts recognized for derivatives by the right to reclaim cash collateral or the obligation to return cash collateral. The amount of collateral to be posted is defined in the terms of respective master agreement executed with counterparties or exchanges and is required when agreed upon threshold limits are exceeded. As of June 30, 2019 and December 31, 2018, the Company posted cash collateral related to derivative instruments under its collateral security arrangements of $1.5 million and $0.8 million, respectively, which is recorded within Other current assets in the Condensed Consolidated Balance Sheets.