Scenario

You are a commodity manager hedging British Airways price exposure to jet fuel oil for the next 2 years. The company requires 100,000 gallons per month (1,200,000 gallons p.a.) of jet fuel oil. Time period is Jan21-Dec21.

Task/ Procedure

In a report of no more than 1000 words, create a risk management strategy to explain how to minimise BAs price risk exposure. It is expected that you will explain your strategy, using your own data and your own research, your hedging strategy in order to minimise price risk. Your strategy can include the use of swaps, options, futures, complex hedging strategies and buying on the spot and also not hedging certain time periods at all. Append all your workings/ calculations to the report.