The Effect of Hedging Price Risk with Crude Oil Derivatives

Martina Bobriková
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Martina Bobriková: Faculty of Economics, Technical University of Košice

Ekonomski pregled, 2025, vol. 76, issue 2, 126-145

Abstract: This study aims to analyze hedging through option strategies against adverse price fluctuations. The methodology involves developing an analytical framework to establish a price ceiling for evaluating the effect of price risk management. This approach facilitates comparisons among different hedging option strategies across various potential price scenarios. The research focuses specifically on theoretical derivations applied within the crude oil market to explore how specific parameters influence the selection of optimal hedging strategies. Additionally, it compares these strategies with those proposed in prior research. The findings suggest recommendations for employing option strategies that align with anticipated future price movements. By incorporating real-world applications in hedging crude oil portfolios, this study aims to enhance its practical relevance. This research fills the gap in the current body of knowledge on hedging using option strategies. Limitations may arise in terms of generalizing results from a single variable, i.e., profitability.

Keywords: energy market; hedging; option strategies; price fluctuation. (search for similar items in EconPapers)
JEL-codes: G13 (search for similar items in EconPapers)
Date: 2025
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