Swaps

A Swap is a paper hedge agreement that allows you to fix your fuel prices at a predefined level, independent of future market movements.

swaps

3 good reasons to use this strategy

  • Rising fuel prices could seriously undermine your business
  • You have a set budget and would like to lock in your future fuel prices
  • You would like effective security against fluctuating fuel prices

Benefits

  • Protection from price volatility
  • Flexibility in physical supply
  • No upfront premium

Disadvantages

  • Opportunity loss if market prices fall
  • Potential basis risk

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