Suppose you are a gas producer who would like to hedge future production. The current...
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Suppose you are a gas producer who would like to hedge future production. The current spot market price of gas is $3.00 and June 2018 futures price is $3.30. Explain whether you should long or short the futures contract in order to hedge the price risk associated with June 2018 production. What happens to the price of your production in June if June price is 3.60 if you are hedged or not hedged? 2.90? Explain.
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