With the development of electricity markets, trading scheduling with risk management becomes more and more important for Generation Companies (Gencos) to protect themselves from the risk of extreme price volatility in the spot market. This paper investigates the effect of two financial instruments (ie, futures contracts and financial transmission rights) in trading scheduling based on the principles of the Modern Portfolio Theory and hedging. Historical data of the PJM electricity market are used to demonstrate the proposed approach to energy allocation. Simulation results indicate that futures contracts and financial transmission rights can reduce the risk of spot and bilateral transaction, respectively, and therefore affect physical trading in these two markets to some extent.