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Forge aHedge provides articles and guides to help you learn to manage your commodity and FX risk with clarity and confidence.

'Tis better to have hedged and lost than never hedged at all.

Well not ‘lost’ perhaps but finished out the money. It’s an irony of most hedging programs that we don’t want them to be effective. This can be a hard concept to explain to senior management at times. Many hedging programs do not hedge 100% of exposures but often follow a so-called ‘declining wedge’. In this case a portion of exposures remains unhedged. Consider a copper purchaser that needs to buy 100 tonnes of copper every month and who has hedged 50% per month at $10k / to

1 min read

'Whither' the price of chocolate?

“The prices of Easter eggs are out of control. Time to tell the kids the Easter bunny has died.” So went a quote in an Australian news article in late February 2026 bemoaning the high price of chocolate. One confectionary vendor (best remaining nameless) maintained: “Like all chocolate makers, we are navigating significantly higher cocoa and input costs globally.” Being purveyors of commodity hedging software (and hoping makers of our favourite snack might have used our softw

2 min read

You don't need to get caught with your pants down when selling naked options

Does selling options have a role in commodity risk management? Many commodity risk managers would shy away from even using options in the more traditional risk sense - buying calls to protect against rising prices or buying puts to protect against falling prices. But a recent intriguing article ( https://iml.com.au/why-options-arent-as-risky-as-you-might-think/ ) from an equity fund manager in Australia, made an interesting argument about enhancing returns through intelligent

2 min read

Stop driving risk management by the rear-view mirror

Would you drive your car by only looking in the rear-view mirror? Probably not, but that's how many companies approach risk management - only implementing hedging after being hit by a major adverse price move. Reactive fixes in finance are far too frequent. Consider a few examples: Barings Bank - controls after the collapse Due to weak controls, Nick Leeson built up huge unauthorized derivatives positions which ultimately sank the 233-year-old institution. Reactive fix: Wid

2 min read