Interview Question on Crude Oil Options
--------------------------------------------------- QUESTION --------------------------------------------------- - Interview Question: A producer of crude oil (WTI) wants to protect their revenue against a potential drop in oil prices by the end of 2025. Based on the financial instruments presented in the attached slide, which option type should they use, and what is the specific condition regarding the market price relative to the given strike price for that option to yield a profit? Deadline to reply: 2-3 minutes - Correct answer: To hedge against falling prices, the producer should buy a Put Option. According to the slide, for this specific contract with an $80 strike price, the position becomes profitable only when the actual market price of WTI Crude Oil is less than $80. A 5-minute video has been uploaded here, that explains the answer in detail. Similar videos can be viewed in Classroom/ 6.3. --------------------------------------------------- DETAILS ABOUT THE JOB OPPORTUNITY --------------------------------------------------- - This interview question has appeared almost identical in the following cases: Interview Round: 2 (technical / commercial awareness) > Shell for the role of Quantitative Analyst , Energy Trading > Chevron for the role of Supply & Trading Analyst > Goldman Sachs for the role of Commodities Strategist (Strats) > Morgan Stanley for the role of Energy Derivatives Associate > S & P Global Platts, for the role of Energy Data Analyst - Salary approximate (gross salary , annual) for junior level (0-3 years experience) and without including the annual bonus. > in the USA around 130,000 USD > in the UK, around 70,000 GBP > In Switzerland, around 110,000 CHF > in UAE , around 250,000 AED > in India, around ₹17 Lakhs > in China, around ¥260,000 > in Africa (mostly S Africa) around R 500,000