УДК: 336.754:339.172

DOI: https://doi.org/10.36887/2415-8453-2020-3-17

Oleh Tiahnyriadno
Postgraduate student of Department of management named after prof. Zavadskyi Y.S., National University of Life and Environmental Sciences of Ukraine

JEL classification: Q13; G32

Abstract

Introduction. Agricultural producers regularly face price and production risks. Moreover, the strengthening of global free trade and changes in domestic agricultural policy increase the likelihood of adverse events. As price volatility increases revenue volatility, manufacturers are realizing the importance of risk management as a component of their management strategies.

One way to reduce these risks is to use commodity futures and other derivatives. Similar to car insurance, hedging potential costs as a result of a car accident, farmers can use commodity futures markets to hedge the potential costs associated with commodity price volatility. Just as if the profit from a car insurance claim cannot exceed the value of the total amount of insurance premiums, the profit from hedging may not cover the cost of hedging.

The purpose of the article is to scientifically substantiate theoretical positions and methodological approaches and to develop alternative risk management strategies through stock exchange instruments, namely, its derivatives – futures and options.

Results. The importance of theoretical bases formation of risks that can be faced by domestic producers is substantiated. The ways uncertainties occur, stages of their transformation, are explained. The theoretical approach to risk management through the use of futures contracts is systematized. The historical stages of development of using derivatives have been evaluated.

Conclusions. In developed countries, any business activity is unthinkable without risks, so any manufacturer seeks to ensure its risk, including a fixed market. The very time market, on which a particular derivative operates, allows redistributing risks among market participants. The advantage of derivatives is the leverage that allows participants to operate large amounts of risk management funds, including hedging their own products.

Keywords: risk, risk management, hedges, options, futures, derivatives.

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The article was received 15.07.2020