Five options structures for hedging | InHedge

Five options structures for hedging | InHedge

Every time a treasurer or CFO requests a quote from a bank to hedge natural gas, aluminum, or any other Commodity, the first question should not be how much the premium costs but which structure actually protects the company’s risk. Financial options offer enormous flexibility for designing hedges, but the choice of structure defines the cost, the effective protection, and the residual exposure that stays on the balance sheet. This guide summarizes the five most used options structures in the OTC market [https://intelligence.inhedge.mx/en/general/five-options-structures-for-hedging/], their advantages, their drawbacks, and the variables the finance team must review before operating with any counterparty. Get full access to InHedge - Commodity Hedging at inhedge.substack.com/subscribe [https://inhedge.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4]

Financial Hedging 101

Managing financial risk often requires a precise understanding of the concepts and instruments involved. Below is a glossary of the most relevant terms in the world of [https://inhedge.mx/en/financial-hedging-glossary/]financial hedging [https://inhedge.mx/en/financial-hedging-glossary/], explained in a clear and concise way. Get full access to InHedge - Commodity Hedging at inhedge.substack.com/subscribe [https://inhedge.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4]

Financial hedging for copper prices

Financial hedging [https://inhedge.mx/en/copper-hedging/] is a strategy aimed at reducing the risk associated with fluctuations in variables such as exchange rates, interest rates, or, in this case, commodity prices like copper. The principle behind a hedge is to offset potential losses in the main operation with gains from a correlated financial instrument. In the case of copper, this involves locking in or limiting the price at which the metal will be bought or sold through contracts such as futures, forwards, or options. Get full access to InHedge - Commodity Hedging at inhedge.substack.com/subscribe [https://inhedge.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4]

Copper tariffs, arbitrage, and renewed uncertainty in the market

As copper tariffs [https://inhedge.mx/en/copper-tariffs-2025/]discussions continue in the United States, inter-exchange spreads and structural supply constraints are shaping copper market behavior. The copper market is currently driven more by external developments than by direct consumption signals. Conversations between producers, consumers, and investment funds during “Copper Day” in New York highlighted how administrative decisions and trade logistics are now exerting influence comparable to market fundamentals. Get full access to InHedge - Commodity Hedging at inhedge.substack.com/subscribe [https://inhedge.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4]

Copper spread – Tariffs trigger opportunity

In recent weeks, the copper market [https://inhedge.substack.com/p/copper-trade-dynamics-shift-with?r=2jr0jc] has shown a notable shift in pricing dynamics between COMEX) and LME futures contracts. From late April to mid-May, the Dec-25 spread narrowed from $1,708 per metric ton to $1,113, reflecting a reassessment of geopolitical risk, policy uncertainty, and trade expectations. This adjustment is not tied to new policy announcements, but to the market recalibrating its expectations regarding potential import tariffs on refined copper in the United States. Learn more here. [https://inhedge.mx/en/copper-spread-tariffs-trigger/] Get full access to InHedge - Commodity Hedging at inhedge.substack.com/subscribe [https://inhedge.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4]