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Use the NYMEX Calls and Puts on Crude Oil Handout that are provided as a handout with this exam. BP decides to hedge the cost
Use the NYMEX Calls and Puts on Crude Oil Handout that are provided as a handout with this exam.
BP decides to hedge the cost of oil that they buy for their refining operation using an option. They want the most they pay to be $70 per barrel for their refinery crude oil purchased (before taking into account the premium). If crude oil prices rise to $100 per barrel, how much will they make or lose on the hedge on a per barrel basis (and be sure to include the premium)?
Group of answer choices
$29.33 profit
$30.00 profit
$29.33 loss
$26.63 loss
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