Forced again to explain the hedging...its ok I am patient Was it really that necessary to hedge currency? It all averages out eventually.
Hedging oil costs? Like all commodities sometimes producers pre-sell at a certain price and that is a guaranteed price no matter what. Logically it makes sense , that is why commodities became a future product, preselling at a fixed price as of a certain date. It was a win win. Not anymore
Because in reality this capitalist pig wall street guy came in and greedily complexified the product, so nobody understands, and started raking in a big cut on each trade. This is what CPG fell into , and also other oil companies. They transformed the future protection in price into a maze of products you could buy and sell at the same time, becoming so complex that no board of directors could see clearly, but they pretend to understand. I see it with experience but very hard to see at first.
CPG and others have been gambling and not selling at a future prefixed price only. Think about how hundreds of millions of losses in the first quarter alone are the results of bets gone bad, not the traditional mission of options, but pure bets on red or black. Instead of just selling and or buying conservative products, they swapped at the ballroom, straddled by the bar, dived into one of 2 drug dens, one called Calls slaoon' and the other called 'puts saloon. Hey and they could sell or buy calls or puts into the profit making ability of each bar.
Note these guys at CPG, and CVE for that matter, did not just presell oil at a fixed price, limiting their risk, they took on gambling at the bars with placing bets on the roulette wheel all over the place. and then when you ask to explain there is an endless myriad of faux savant words to lose you completely with an increasing condescending tone. They could have avoided the hundreds of millions on losses gambling, with the right conservative option products. They are in the oil business for petes sake how can they now be gambling and losing hundreds of millions in one quarter alone. They did not 'hedge' with low risk products, they gambled to try to increse their bonuses and no one here sees that. Its because they dont publish the exact options they both simultaneously purchased and sold. Even the AIF does not force divulgation. They are the worst of the worst, gambling with my money instead of focusing on keeping costs down and not investing in more land and more junk production besides the daily incursions into the casino.
This is why the price is low. You mention shorting, please give me a break, no one seriously shorts undervalued commodity stocks at the bottom of the cycle.
I know more than you think....