Hydro Power generates, under normal conditions, 20 MW (MW = Mega Watt). The spot price under normal conditions is 35/MW. Under unfavourable weather conditions (cold and dry) the price increases to 50/MW, while Hydro generates only 10 MW. Under favourable weather conditions (warmer and wet), the price falls to 15/MW, but Hydro generates 25 MW. The fixed operating costs are 250 , while the Marginal Cost is zero. The company plans to hedge its generation by either: (i) buying 20 put options (equivalent to 20 MW), with E = 35 /MW at a premium of 1/MW, (E = Exercise price), or (ii) selling futures (again at E = 35 /MW). Evaluate both alternatives and compare them to no-hedge. Which is better? Motivate your answer! (Calculate everything per MW). Notice that extra or lower generation can be sold/bought at the electricity market NordPool at the prevailing price.