Question
What is the purpose of the daily marking to market feature that the futures exchange implements on all futures contracts traded on the exchange? Why
What is the purpose of the daily marking to market feature that the futures exchange implements on all futures contracts traded on the exchange? Why would an investor wishing to hedge against price risk/s use futures contracts rather than using forwards?
You are an oil trader wishing to hedge against oil price risk. You have to purchase 100,000 barrels of oil in the course of the next three months. Oil futures are available for you to implement your hedging strategy. Describe your hedging strategy using oil futures and explain how it will help you hedge against oil price risk/s.
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