Use of Options in Commodity Hedges

Nick Cavalla
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Nick Cavalla: County NatWest Investment Management

A chapter in ICCH Commodities Yearbook 1990, 1990, pp 19-22 from Palgrave Macmillan

Abstract: Abstract Although options first arose from the commodities markets, it is financial market applications which have been the dominant feature of the last two decades: financial risks are more obviously multifarious in nature, and the option is now widely seen as an additional and powerful tool for the hedger. However, it would be inaccurate to characterise participants in commodities markets as unsophisticated in terms of risk management procedures. Although starting from a low base, the volumes of London’s exchange traded commodity options, particularly those relating to the energy markets, have been steadily increasing.

Keywords: Implied Volatility; Future Price; Sharpe Ratio; Price Movement; Future Contract (search for similar items in EconPapers)
Date: 1990
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DOI: 10.1007/978-1-349-11268-5_5

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