Crude oil futures contracts are 1,000 barrels, are quoted in dollars per barrel, and the initial margin is $9,000 per contract. Soybean futures contracts are 5,000 bushels, are quoted in cents per bushel, and have an initial margin of $4,725. E-mini S&P 500 futures contracts are quoted in S&P 500 index value with a $50 multiplier and have an initial margin of $12,650 per contract. Gold futures contracts are 100 ounces and are quoted in dollars per ounce.

5. JL Distribution (JLD) plans to hedge its November purchase of crude oil. JLD will employ a long futures market hedge. 5 pts a. To hedge the November spot market crude oil purchase, what will be JLD's trades in the futures market look like? b. If crude oil prices go down will JLD make a profit or loss on its hedge position? c. Describe, briefly and specifically, how JLD's futures market position hedges the price risk of purchasing the crude oil