Hedging is a time-honored risk management solution that is applied to a broad range of commodities and financial instruments. It’s main purpose is to mitigate volatility and protect margin by providing some certainty in what are uncertain markets. In the airline industry, the practice offered some carriers, such as Southwest Airlines, significant advantages in the high volatility markets of recent years. Hedging is similarly commonplace for heating oil marketers, but it is certainly not a universal practice.
This story originally ran in Fuel Oil News. View the full article here.