Hedging with options on physical vs. futures?

asked by u/fontaine_marie · 3d · 0 answers

Still getting my head around commodity hedging. For those dealing with physical commodities, do you find it more effective to hedge price risk directly with options on the physical product (if available) or by using options on the corresponding futures contract, even with the basis risk? I've been running some scenarios, and the slippage on futures options seems to be a recurring headache for my smaller scale.

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