Consider an oil drilling company planning to sell 100 000 barrels of oil in February that wishes to hedge against a possible decline in oil prices. Suppose that current futures price of oil is Fo = 71.86$. Should company go long or short? Show that company hedged her position if the price in February turns out to be 69.86, 71.86, and 73.86. Suppose: silver future contract - 1 ths. ounces price - 17.1$/ounce o initial margin 15% o maintenance margin 10% Suppose you buy one future contract. What your margin account balance will be if the prices of silver future are = day price 1 2 3 4 5 17.2 17.25 17.18 17.18 17.21 What if the price at day 5 is 16$? Consider an oil drilling company planning to sell 100 000 barrels of oil in February that wishes to hedge against a possible decline in oil prices. Suppose that current futures price of oil is Fo = 71.86$. Should company go long or short? Show that company hedged her position if the price in February turns out to be 69.86, 71.86, and 73.86. Suppose: silver future contract - 1 ths. ounces price - 17.1$/ounce o initial margin 15% o maintenance margin 10% Suppose you buy one future contract. What your margin account balance will be if the prices of silver future are = day price 1 2 3 4 5 17.2 17.25 17.18 17.18 17.21 What if the price at day 5 is 16$