Download PDF Hedging with Commodity Futures

[Free PDF.f6jY] Hedging with Commodity Futures

[Free PDF.f6jY] Hedging with Commodity Futures

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Book Details :
Published on: 2013-11-13
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Original language: English

Master's Thesis from the year 2013 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,7, University of Mannheim, language: English, abstract: The commodity futures contract is an agreement to deliver a specific amount of commodity at a future time . There are usually choices of deliverable grades, delivery locations and delivery dates. Hedging belongs to one of the fundamental functions of futures market. Futures can be used to help producers and buyers protect themselves from price risk arising from many factors. For instance, in crude oil commodities, price risk occurs due to disrupted oil supply as a consequence of political issues, increasing of demand in emerging markets, turnaround in energy policy from the fossil fuel to the solar and efficient energy, etc. By hedging with futures, producers and users can set the prices they will receive or pay within a fixed range. A hedger takes a short position if he/she sells futures contracts while owning the underlying commodity to be delivered; a long position if he/she purchases futures contracts. The commonly known basis is defined as the difference between the futures and spot prices, which is mostly time-varying and mean-reverting. Due to such basis risk, a naïve hedging (equal and opposite) is unlikely to be effective. With the popularity of commodity futures, how to determine and implement the optimal hedging strategy has become an important issue in the field of risk management. Hedging strategies have been intensively studied since the 1960s. One of the most popular approaches to hedging is to quantify risk as variance, known as minimum-variance (MV) hedging. This hedging strategy is based on Markowitz portfolio theory, resting on the result that "a weighted portfolio of two assets will have a variance lower than the weighted average variance of the two individual assets, as long as the two assets are not perfectly and positively correlated." MV strategy is qui Energy Products - CME Group Find contract specifications and other information on a range of NYMEX energy futures and options contracts. A complete listing provided here. Commodity Futures and Options Brokerage KIS FUTURES INC. is a discount Commodity Futures and Options Brokerage. Commodity Prices / Quotes & Commodity Charts - Free Free! commodity prices and charts courtesy of TradingCharts (TFC Commodity Charts). We track many major commodities and financial indicators making the information ... CIH - Commodity & Ingredient Hedging LLC Make Better Decisions. Commodity and Ingredient Hedging LLC (CIH) provides a personalized price management education and consulting service that helps guide you in ... Hedge (finance) - Wikipedia Airlines use futures contracts and derivatives to hedge their exposure to the price of jet fuel. They know that they must purchase jet fuel for as long as they want ... Commodity Futures Contract Definition Investopedia What is a 'Commodity Futures Contract' A commodity futures contract is an agreement to buy or sell a predetermined amount of a commodity at a specific price on a ... Futures & Options Trading for Risk Management - CME Group CME Group is the world's leading and most diverse derivatives marketplace offering the widest range of futures and options products for risk management. RCM Futures - Commodity Trading Companies - Brokerage ... RCM Futures is one of the most trusted commodity trading companies and brokerage firms in Chicago. Call us now for a quote! Commodity Futures Trading Commission - Wikipedia The U.S. Commodity Futures Trading Commission (CFTC) is an independent agency of the US government created in 1974 that regulates futures and option markets. Commodity Futures Trading Commission - Home - CFTC The laws authorizing CFTCs activities and the regulations issued by CFTC to carry out those activities as well as related rulemaking enforcement and ...
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