Hedging

[Quan Vu]

Hi everybody,
I have some questions about hedging
I promise to sell 1ooo barrels at $120 next year. So my hedge is long forward at $118
If the spot today and next year are both 115, what is the hedge 's profit/loss?
I think the profit is $118 - $115
But I am confused about the cash inflow $ 120 when I compare between the profits of " cash flow from delivery" and " hedging" . Thank a lot.

 

[elitezero]

you sell x at T for 120, while the market price at T is 115. - you win 5
you buy x at T for 118, while the market price at T is 115. - you lose 3

your overall position is +2

in other words.

you sell something at T for 120
you buy something at T for 118

position is +2

but thats no hedge strategie

 

[Quan Vu]

I think like that but http://risklearn.com/strip-and-stack-hedge/
they compare between profit from " cash flow from delivery " and " strip hedge" or " stack hedge"
I can't understand