Professor Elam

Tuesday April 10, 2012

The Chicago Mercantile Exchange is one of rou bourses on a short list of bidders for the Lond don Metal Exchange.

Meanwhile Zero Hedge reports that CHesapeake Energy CHK did not 'hedge' its natural gas production going into 2012. What does that mean? Othe rnat gas companies like encana, Linn Energy, Venoco has gedged at least 75% of thier 2012 production. 

Hedging is a for of risk management. The futures market exists to offer strategies to lower risk. A natural gas producer who hedges sells production forward at a fixed price to 'lock in' revenue. 

We are studying derivatives in Intermediate Accounting. Please reaad this article as part of your study of futures markets.