Question: Show how Petrochemical Parfum (see Section 26.2) can also use futures contracts to protect itself against a rise in the price of crude oil. Show

Show how Petrochemical Parfum (see Section 26.2) can also use futures contracts to protect itself against a rise in the price of crude oil. Show how the payoffs would vary if the oil price is $88, $90, or $92 a barrel. What are the advantages and disadvantages for Petrochemical of using futures rather than options to reduce risk? Repeat the exercise for Onnex. Assume the futures price for oil is $90 per barrel.

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