A Cap is a paper hedge agreement designed to protect you from rising prices, yet allows you to benefit from falling prices. Also known as "call option".


Two good reasons to use this strategy

  • Rising fuel prices would seriously undermine your business
  • You would like to benefit from falling prices after having fixed your maximum fuel prices


  • Protection from price increases
  • Benefit from falling fuel prices
  • Flexibility in physical supply


  • Premium upfront
  • Potentially some basis risk

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