CPG is not in oil but in currency hedges-124 mill a quarterOk I will explain the hedging on currencies because NO ONE here understands.
They sold calls betting the difference in price between two currencies would not exceed x amount.
By doing this they are like an insurer , receiving a premium and if all is well and the amount of x is not exceeded, they make money or at least receive a premium.
The problem is if they accepts the premium and allow the loss to be without limit, every time tne currency difference increases beyond X it becomes a humongous loss to compensate dollar for dollar as the difference increases vs the relatively tiny insurance premium received. The spread of the difference has no ceiling, thats what people dont understand.
So obviously , since hedges are supposed to provide stability and price increase protection so that revenue is predictable (look it up in investopedia, wikipedia or anywhere ) they did not protect the if t
he difference in price from X which has become too big. They could have soldl puts to cushion the blow or buy calls a different month at a different strike price etc.
Not these guys they were hoping for a win for their bonuses with no risk to them. Talk about the 124 million loss IN ONE QUARTER PLEASE, FORGET OIL, because oil is not the problem its the types of combinations they put together for options. I am afarid this will continue and suspect that president was fired because of this- because expensive consultants analysed the setup no one understood and they saw the gambling.
Its a good thing I am here because you will finally understand the share price.