Hedging Importance |  | |||
| Critical | Disruptive | Annoying | Immaterial | |
| Price's Effect on Financials | Small price moves have outsized consequences | Commodity prices can interfere with budget goals | Achievable goals are | Low impact, even if |
| Hedging Goal | Certainty and precision | Defend a | Hedges as | Opportunism |
| Popular Hedging Tactics | Swaps | Probabilistic and | Call options | Limit |
| Should I Hedge? | Start immediately! | Yes, actively manage | Yes, infrequently | No |
Hedging should be done with a goal in mind; that goal is a combination of hedges that efficiently remove risk and keep your financial goals attainable. |
| Do prices vary on the commodities integral to my business? | ||
 | YES | |
| Does price volatility threaten my financial goals? | ||
| YES | |
| Can my goals be quantified in financial metrics? | ||
| YES | |
| Hedging could be right for you. |