Short Hedges: Example a Hedging May 15: short 1000 August oil futures (each contract is written on 1000 barrels) August 15: close out the position Outcome Exxon effectively locks in a selling price of $1875/bae Charles cao6 Charles Cao Short Hedges: Example ◼ Hedging: ◼ May 15: short 1000 August oil futures (each contract is written on 1000 barrels) ◼ August 15: close out the position ◼ Outcome: ◼ Exxon effectively locks in a selling price of $18.75/barrel