Part II: Commodity Price Risk As the oil producer, you will have 100,000 barrels of oil in 3 months. Suppose your oil production cost is $70 per barrel. You are concerned with high volatility of oil price recently and decide to hedg the oil price risk. Following are some derivatives you can choose to use. - 3-month oil forward with forward price $88 per barrel - 3-month oil options Come up with five different hedging strategies and find your profit 3 months later with each strategy, given the following realizations of oil price: 82,86,89, or 92 per barrel. Assume that the effective annual interest rate is 4%. Part II: Commodity Price Risk As the oil producer, you will have 100,000 barrels of oil in 3 months. Suppose your oil production cost is $70 per barrel. You are concerned with high volatility of oil price recently and decide to hedg the oil price risk. Following are some derivatives you can choose to use. - 3-month oil forward with forward price $88 per barrel - 3-month oil options Come up with five different hedging strategies and find your profit 3 months later with each strategy, given the following realizations of oil price: 82,86,89, or 92 per barrel. Assume that the effective annual interest rate is 4%