On December 4 you agree to sell 200,000 barrels of crude oil to a refiner for delivery in May the following year. You are worried about the oversupply of crude oil and want to protect yourself against price decreases. A June put option with USD 17.00/barrel strike is trading for USD 1.05/barrel. The June crude oil futures contract is trading at USD 17.05/barrel on December 4. Your delta is 0.58. The expected basis in May is USD -$0.76/barrel. (The crude oil futures contract is for 1000 barrels.)

a)How many put options should you buy on December 4?

b)What is the expected minimum selling price for your crude oil on December 4 assuming commission is zero?

c)On March 3, the June crude oil futures contract is trading at USD 15.83/barrel. The June USD 17.00/barrel put is trading for USD 1.56/barrel, and the delta is now 0.93. How would you update your hedge

d)On May 12, the June crude oil futures is trading at USD 15.05/barrel. The June USD 17.00/barrel put is trading at USD 1.95/barrel. You sell your 200,000 barrels of crude oil at USD 14.68/barrel. What was the net price of your 200,000 barrels of crude oil?