Applying Option Portfolio Strategy to Manage Crude Oil Trade Risk

Since February this year, the conflict between Russia, one of important exporters crude oil, and Ukraine has gradually intensified, causing international market to worry about supply oil. Together with speculation in United States, oil prices have been moving higher. We use an option portfolio strategy for hedging offset increased costs purchaser firms profits financial markets. a binomial tree pricing model calculate price it derive its delta value. The is constructed by selecting real flat options based on delta-neutral results. After comparing results analysis, call inverse ratio spread optimal bull next best. protective using futures good risk control but limited profitability. Finally, put forward suggestions enterprises who uses derivatives hedging.