6. On January 22, 2021, you would like to hedge a long physical oil position for April 16, 2021 delivery. Rather than directly hedge using May Crude Oil futures contracts that have a delivery date close to April 16, 2021, you wish to use a rolling hedge to take advantage of the market liquidity in the short-term Crude Oil futures contracts. On January 22, 2021, you short a March 2021 Crude Oil futures contract. You then roll into the April 2021 futures contract on February 19, 2021 and then roll again into the May 2021 futures contract on March 19, 2021. Your physical oil transaction takes place at the spot price of $54.93 on April 16, 2021. Calculate your gain or loss in the futures market and the net payoff from selling oil after considering both the physical and futures markets. March 2021 April 2021 May 2021 Date Futures Price Futures Price Futures Price Jan 22 51.98 51.74 51.55 Jan 29 51.52 51.41 51.31 Feb 5 51.18 51.22 51.27 Feb 12 53.09 53.31 53.65 Feb 19 53.88 54.10 54.45 Feb 26 53.40 53.45 Mar 5 52.25 52.15 Mar 12 54.74 54.84 Mar 19 55.43 55.70 Mar 26 56.33 Apr 2 57.18 55.52 Apr 9 Apr 16 54.93 6. On January 22, 2021, you would like to hedge a long physical oil position for April 16, 2021 delivery. Rather than directly hedge using May Crude Oil futures contracts that have a delivery date close to April 16, 2021, you wish to use a rolling hedge to take advantage of the market liquidity in the short-term Crude Oil futures contracts. On January 22, 2021, you short a March 2021 Crude Oil futures contract. You then roll into the April 2021 futures contract on February 19, 2021 and then roll again into the May 2021 futures contract on March 19, 2021. Your physical oil transaction takes place at the spot price of $54.93 on April 16, 2021. Calculate your gain or loss in the futures market and the net payoff from selling oil after considering both the physical and futures markets. March 2021 April 2021 May 2021 Date Futures Price Futures Price Futures Price Jan 22 51.98 51.74 51.55 Jan 29 51.52 51.41 51.31 Feb 5 51.18 51.22 51.27 Feb 12 53.09 53.31 53.65 Feb 19 53.88 54.10 54.45 Feb 26 53.40 53.45 Mar 5 52.25 52.15 Mar 12 54.74 54.84 Mar 19 55.43 55.70 Mar 26 56.33 Apr 2 57.18 55.52 Apr 9 Apr 16 54.93