Suppose today is September 21st and youre a jewelry manufacturer that will need 1,500 ounces of gold in December for the Winter production run. Given that youre concerned gold prices might go up between now and December, you would like to lock in your costs today if possible. Currently the December Gold Futures contract (1 Contract = 100 ounces) is trading at $1,600 per ounce and the clearing house requires an initial margin of $12,000 per contract and a maintenance margin of $7,000 per contract. What trade could you implement to hedge your risk exposure?

Short 15 December Gold Futures Contracts

Long 15 December Gold Futures Contracts

Long 150 December Gold Futures Contracts

Short 150 December Gold Futures Contracts