Spreads

Limited Price Caps (Call Spreads)

How it works
A limited price cap is created using two call options. A consumer hedger will want to have limited protection against increases in the cost of fuel while enjoying lower prices if possible. By using two call options, the hedger will be protected from increasing prices up to a defined level and will be able to decide whether the cost of the call spread makes sense for a given budget. Often, HCEnergy will help solve for the price levels that fit a given budget.

 

 

 

 

Limited Price Floors (Put Spreads)

How it works
A limited price floor is created using two put options. A producer hedger will want to have limited protection against decreases in the cost of fuel while enjoying higher prices if possible. By using two put options, the hedger will be protected from decreasing prices down to a defined level and will be able to decide whether the cost of the put spread makes sense for a given budget. Often, HCEnergy will help solve for the price levels that fit a given budget.