A refiner has 250 tons of CPO in inventory. He will be holding this over the next 3 months. He intends to protect himself from a fall in the price of CPO which could cause him losses since his output price is tied to CPO prices. he has the following information: Current Inventory = 250 tons, Spot price = $1100 per ton, Rf = 6% per year, Annual storage cost = $ 44 per ton (4% per annum), 3-month CPO futures = $ 1126.53 If the refiner wants to protect him from price falls, what is his net gain from the position if the CPO prices fall by 20% at maturity? O a. 3882.5 O b. -55,000 O c. 48,367.50 O d. 61,632.5
