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Old 24th Feb 2009, 06:17
  #90 (permalink)  
im sparticus
 
Join Date: Jan 2008
Location: australia
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6100, if hedging is like insurance perhaps you can explain why vb reported a $200mil mark to market loss against there fuel hedging positions, according to your definition they should have only lost the premium, the setup of the hedge was very cheap maybe even free or maybe even gave them a net credit in exchange for increased or all of or even multiples of downward market risk!

anyhow fuel hedging is not an insurance policy, its about fixing and smoothing the cost of fuel, not freaking out and locking in when fuel gets unbearably expensive and throwing the strategy away when its not, for it to work your hedge has to be consistent throughout the price cycle.

Last edited by im sparticus; 24th Feb 2009 at 08:00.
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