POSSIBLE WAY OF RISK REDUCTION WHEN INVESTING IN OIL FUTURES
UDC: 622.276.336.5
DOI: 10.33285/1999-6942-2021-2(194)-38-43
Authors:
ANISIMOVA SVETLANA EVGENIEVNA1,
VOLODINA IRINA NIKOLAEVNA1,
SHAPORDA ZLATA VIKTOROVNA1
1 National University of Oil and Gas "Gubkin University", Moscow, Russian Federation
Keywords: derivatives, crude oil futures, futures hedging, notional value, mutual funds, linear correlation coefficient, options on futures, break-even point, ETFs & ETNs, commodity pool
Annotation:
The paper briefly considers the main possible techniques of oil futures hedging, including both standard fundamental market analysis and professional organizations specializing in a profitable portfolio formation and undertakings all market transactions. Although the futures themselves are a protection finical tool against market prices’ fluctuations, they can also pose a high risk due to a significant amount of financial leverage involved in the transactions. This could either lead to massive profits or losses, even with small price fluctuations. The present paper examines in detail the meaning of the notional value and hedging ratio as well as additionally analyzes the principle of operation of mutual and exchange-traded investment funds, a commodity pool, which are based on the diversification of the investment portfolio. The paper will be of interest both to financial sector specialists and those ones who plan to become futures traders or users the services of investment funds.
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