Hot answers tagged hedging
This is a much simpler problem than stated, (assuming the correlation is positive). In 1 month you need to BUY 2mn of jet fuel. If Jet fuel prices go up, you lose money as it's more expensive. If jet fuel prices go down, you make money as it's cheaper. So to "hedge" your risk you will LONG the heating oil, as you are not in the business of speculating on ...
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