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Airline will purchase 2.5 million gallons of jet fuel in one month and hedges using heating oil futures. From historical data S.D of futures and

Airline will purchase 2.5 million gallons of jet fuel in one month and hedges using heating oil futures. From historical data S.D of futures and spot price have been 0.0413 and 0.0363, respectively. The correlation between the spot and futures prices of the underlying is 0.895. In addition, the size of one heating oil contract is 42,000 gallons; the spot price is 2.32 and the futures price is 2 (both dollars per gallon). What is the optimal number of futures contracts with tailing of the hedge?

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