Question regarding oil companies and hedging..
I have a question that may have a very obvious answer, but I still figured I would ask because I don't seem to understand it.
The question is, if oil companies long/short derivative instruments in order to hedge against the risk of oil prices rising, what happens when oil slides such as it currently is? Wouldn't this mean that oil companies should be losing tons of money as a result of their inaccurate hedge positions?
Anyone who can shed some light on this for me would be greatly appreciated.
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