ASAPpleasethank you

Suppose you work for an airline that needs to purchase 100t of jet fuel for a flight it has scheduled for next year in June. Now, jet fuel costs $1.3 /litre but you are concerned about the price next year in June and you are planning to reduce this risk where possible. Strike prices are quoted at $1.37 a) Explain how you can reduce the risk of jet fuel prices increasing using options contracts 12 marks). Would you use a call or put option? (1 mark) Would you be long or short? (1 mark) b) Say you have purchased the type of options defined in a) for $0.05 each and in June next year jet fuel is trading at \$1.39. Will you use your options? (1 mark) Did you make a profit overall? Show vour workings. (3 marks) c) Rather than using options to hedge, you can also use future contracts. What are the differences between the two and which one is more convenient/attractive? Which one should have a higher premium/is more expensive? ( 2 marks)