Commercial Hedgers are typically the end-users of commodities. Common examples are multinational grain merchandisers that source product in order to serve food production customers, supply ethanol plants, and/or meet export market demands.
Commercial hedgers may use IFM OTC instruments in order to:
- Hedge their up-side market price risk with OTC Lookalike options and Swaps.
- Take advantage, of IFM’s initial and variation margin thresholds (if they qualify for them), which in some cases can act as financing.
- Find hedging strategies using OTC customizable options that enable them to manage their production with specific contract sizes, expiration dates and strike months.
- Pursue the ability to pass along to customers potential cost savings achieved through hedging.