You want to hedge against the price movements for 1,000 barrels of crude oil in one year (September next year). You decide to go long one seven month contract (April) with the intention to close out the position in six months (March), and roll over into a new seven month contract (October next year) at that time.

Suppose the April contracts currently trade for $55 per barrel, and suppose there are four possible outcomes in March. The four outcomes in March are listed below (with all prices expressed per barrel):