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Using the estimate of 17.5 million gallons per month, how would you construct a NYMEX option hedge for the next 12 months? Using KCNB products,

Using the estimate of 17.5 million gallons per month, how would you

construct a NYMEX option hedge for the next 12 months? Using KCNB

products, how would you construct a commodity-option hedge for 210

million gallons? What is the total cost of each? (Hint: use at-the-money

calls and an at- the-money cap to construct the hedges.)

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