Examine an ex-post long hedging position for a futures commodity purchase.

a. Select a futures contract and use the expiration date on the futures contract as the date of your purchase.

b. Use the "Chart" screen (Chart ) to create multigraphs for the prices on the futures and spot price (use SECF to find the spot prices on the commodity). On the Chart Menu screen, select Standard G chart; once you have loaded your futures and commodity, go to "Edit" to put your graphs in separate panels.

c. Select a beginning date that you would have implemented your hedge and a closing date near the futures expiration as the date for purchasing the commodity and closing your hedge. Calculate the profit or loss on the futures position from opening and closing at the futures prices at the beginning and ending dates, the cost of purchasing the commodity on the closing date, and the hedged cost (commodity purchase minus futures profit). Compare your hedged cost to the unhedged cost. In retrospect, was the hedge a good strategy?