# 金融代写|期货期权代写Futures Options代考|AFIN546

## 金融代写|期货期权代写Futures Options代考|Hedging Can Lead to a Worse Outcome

It is important to realize that a hedge using futures contracts can result in a decrease or an increase in a company’s profits relative to the position it would be in with no hedging. In the example involving the oil producer considered earlier, if the price of oil goes down, the company loses money on its sale of 1 million barrels of oil, and the futures position leads to an offsetting gain. The treasurer can be congratulated for having had the foresight to put the hedge in place. Clearly, the company is better off than it would be with no hedging. Other executives in the organization, it is hoped, will appreciate the contribution made by the treasurer. If the price of oil goes up, the company gains from its sale of the oil, and the futures position leads to an offsetting loss. The company is in a worse position than it would be with no hedging. Although the hedging decision was perfectly logical, the treasurer may in practice have a difficult time justifying it. Suppose that the price of oil at the end of the hedge is $\$ 59$, so that the company loses$\$10$ per barrel on the futures contract. We can imagine a conversation such as the following between the treasurer and the president:

President: This is terrible. We’ve lost $\$ 10$million in the futures market in the space of three months. How could it happen? I want a full explanation. Treasurer: The purpose of the futures contracts was to hedge our exposure to the price of oil, not to make a profit. Don’t forget we made$\$10$ million from the favorable effect of the oil price increases on our business. President: What’s that got to do with it? That’s like saying that we do not need to worry when
Treasurer: If the price of oil had gone down…

## 金融代写|期货期权代写Futures Options代考|Choice of Contract

1. 期货的底层资产的混乱
2. 交货月份的选择。
如果被对冲的资产与期货合约的基础资产完全匹配，那么首选通常相当容易。在其他情况下，有必要进行仔细分析，以确定哪些可用期货合约的期货价格与被对冲资产的价格最密切相关。

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