the derivatives strategy is mostly wrong because

I. Using a futures contract would produce interim cash flows that can lead to imperfections in the hedge transaction.

II. he does not want to invest (or deposit) anything upfront, so options are not viable.

III. he does not wish to close out the position thus the illiquidity of most forward contracts would not be a problem.

A. I and II

B. II and III

C. I, II, and III