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New study reveals how commodity hedging can revolutionize supply management!

Encyclopedia of Quantitative Finance
Commodity Risk
Paul R. Kleindorfer

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The article discusses how options and other contracts are used to manage risks in commodity markets. It focuses on a buyer who wants to protect themselves from price changes by using contracts and financial instruments. Sellers compete to supply the buyer, and the buyer can reserve capacity through contracts and hedge them with financial contracts. The goal is to find the best mix of sourcing and hedging options to minimize risk.