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Question
Swenson Oil & Gas allows its customers to prepurchase heating oil in June for the coming winter. Customers who took advantage of the offer prepurchased 400,000 gallons of oil at $3.00 per gallon. Swenson hedged its position by contracting to purchase 400,000 gallons of oil for November delivery at a price of $2.50 per gallon. If the November spot price is $2.25 per gallon, the payoff to Swenson is:A) $100,000.
B) ($100,000).
C) $200,000.
D) $0.00.
Answer
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