Company A owns a nuclear power plant and typically sells power into the day-ahead market.

It wants to hedge the day-ahead market price risk.

Which of following financial contract should it enter into to hedge its financial risk? Explain in detail.

A) Take a short position in electricity future contract.

B) Take a long position in electricity future contract.

C) Purchase a call option for electricity.

D) Purchase a put option for electricity.

E) Sell a call option for electricity.

F) Sell a put option for electricity.