I NEED HELP IN UNDERSTANDING THIS PROCESS. I NEED THE WHY'S.

THE SOLUTIONS ARE ALREADY PROVIDED BUT I NEED TO UNDERSTAND THE CONCEPTS, STEPS TO GET THEIR, ETC. PLEASE DUMB IT DOWN.

ITS OVER FINANCE DEALING WITH HEDGING, PUTS, CALLS, LONG AND SHORT.

2. You are working on potential hedges for E&P, Inc.'s March 2019 oil production. You observe the following market prices for March 2019 Oil forwards and oil options: March 2019 Forward price = $73.00/barrel Strike Call price/barrel Strike Put price/barrel $ 5.00 $ 2.00 4.00 3.00 74 3.00 4.00 76 2.00 5.25 70 70 72 A) If the price of oil in March 2019 turns out to be $68.00 per barrel, what is the net price per barrel (considering the costs/benefits of the hedge) to be received by E&P for the following five strategies? a) unhedged; $68.00 b) forward sale at $ 73.00/barrel; $73.00 c) sell calls with a strike of $74.00/barrel; $68 + $3 = $71.00 d) buy puts with a strike of $72.00/barrel; $72 - $3 = $69.00 e) Collar: buy a put with a $72 strike, sell a call with a $74 strike; $72 - $3 + $3 = $72.00 B) If the price of oil in March 2019 turns out to be $78.00 per barrel, what is the net price per barrel (considering the costs/benefits of the hedge) to be received by E&P for the following five strategies? a) unhedged; $78.00 b) forward sale at $ 73.00/barrel; $73.00 c) sell calls with a strike of $74.00/barrel; $74 +$3 = $77.00 d) buy puts with a strike of $72.00/barrel; $78 - $3 = $75.00 e) Collar: buy a put with a $72 strike, sell a call with a $74 strike; $74 - $3 + $3 = $74.00