On January 1, Rajesh owns 6,000 shares of IOC and is planning to sell them on February 28. Each con-
tract size is 600 shares of IOC. e price of the February IOC futures contract is INR 790. e spot price
of IOC is INR 777.30 on January 1. If the spot price of IOC shares on February 28 is INR 544.40, show
how Rajesh can hedge the price risk and what will be the result of this hedge?
Step 1: Since Rajesh is concerned about a possible price decrease, he would take a short position in the
futures.
Step 2:Rajesh would use the IOC futures contract to hedge this price ...
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