System Providing Commodity Price-Move Protection for Small Risk Holders

Abstract

A system for providing small to medium sized entities commodity price move protection is disclosed. The system may have the steps of receiving information from a client, selecting an appropriate commodity instrument, aggregating the client with other clients, and selecting an appropriate hedge in the event that the instrument provides for more protection than is sought by the aggregated clients and protection for the service provider is desired.

1 .- 20 . (canceled) 
     
     
         21 . A method of providing commodity price-move protection comprising the steps of:
 receiving a quantity of information provided by a first client comprising a payout date and a quantity of desired protection by at least one computer of a service provider;   selecting a first commodity instrument using the at least one computer, the first commodity instrument selected to provide a price-move protection greater than or equal to the quantity of desired protection provided by the first client;   calculating a percentage ownership required in the first commodity instrument to provide the quantity of desired protection to the first client using the at least one computer, a balance percentage of ownership being owned by a service provider;   selecting a hedge for the service provider using the at least one computer based at least in part on the balance percentage of ownership being owned by the service provider;   receiving a second quantity of information from a second client comprising a second payout date and a second quantity of desired protection by the at least one computer;   aggregating the second quantity of desired protection of the second client with the quantity of desired protection of the first client by the at least one computer of the service provider, forming an aggregated quantity of desired protection;   calculating a new percentage ownership in the first commodity instrument of the first client and the second client to provide the aggregated quantity of desired protection by the at least one computer, a second balance of ownership being owned by the service provider;   liquidating the percentage ownership of the first client on the payout date provided by the first client by the at least one computer; and   liquidating the a percentage ownership of the second client providing the second quantity of desired protection on the second payout date provided by the second client by the at least one computer.   
     
     
         22 . The method of  claim 21  further comprising the step of selecting a second hedge for the service provider using the computer based at least in part on the second balance of ownership being owned by the service provider. 
     
     
         23 . The method of  claim 21  further comprising the step of executing a trade for the selected hedge. 
     
     
         24 . The method of  claim 21  wherein the step of selecting the hedge comprises selecting from a group of hedges owned by the service provider. 
     
     
         25 . The method of  claim 21  wherein the step of selecting the first commodity instrument comprises selecting from a group of commodity instruments owned by the service provider. 
     
     
         26 . The method of  claim 21  wherein the step of selecting the first commodity instrument comprises purchasing the first commodity instrument at a market price. 
     
     
         27 . The method of  claim 21  further comprising the step of offering a contract to the first client at a price calculated by the computer. 
     
     
         28 . The method of  claim 27  wherein the step of offering a contract to the first client at a price calculated by the computer comprises the step of calculating the price based on the quantity of desired protection, cost to a service provider, and a markup. 
     
     
         29 . The method of  claim 21  wherein the step of liquidating the first client on the payout date further comprises the step of providing the first client with a payout compensating for a protected price move in an adverse price move event, and providing no payout in a favorable price move event. 
     
     
         30 . The method of  claim 21  further comprising the steps of:
 receiving a third quantity of information from a third client comprising a third payout date and a third quantity of desired protection, using the at least one computer; 
 determining that the first commodity instrument cannot provide the third quantity of desired protection using the at least one computer; 
 selecting a second commodity instrument to provide at least the third quantity of desired protection using the at least one computer; 
 purchasing the second commodity instrument by the service provider using the at least one computer; 
 liquidating the ownership of the first and second client from the first commodity instrument using the at least one computer; 
 repurchasing the ownership of the first and second client in the second commodity instrument using the at least one computer; and 
 aggregating the third quantity of desired protection of the third client with the aggregated quantity of desired protection using the at least one computer, forming a second aggregated quantity of desired protection. 
 
     
     
         31 . The method of  claim 30  further comprising the steps of:
 calculating a third percentage ownership in the second commodity instrument of the first, second and third client using the at least one computer to provide the second aggregated quantity of desired protection, the balance of ownership being owned by the service provider; and 
 selecting a third hedge for the service provider using the at least one computer. 
 
     
     
         32 . The method of  claim 21  wherein the step of receiving a quantity of information from the first client comprises the step of receiving a percentage of desired protection from the first client. 
     
     
         33 . A method of providing commodity price-move protection comprising the steps of:
 receiving a quantity of information provided by a first client comprising a payout date and a quantity of desired protection by at least one computer of a service provider;   selecting a first commodity instrument from a group of commodity instruments owned by a service provider using the at least one computer, the first commodity instrument selected to provide the quantity of desired protection provided by the first client;   aggregating the quantity of desired protection of the first client with an aggregated quantity of desired protection of a plurality of clients using the at least one computer, thereby forming a second aggregated quantity of desired protection, the first commodity instrument being capable of providing at least the second aggregated quantity of protection;   calculating a new percentage ownership in the first commodity instrument of the first client combined with the plurality of clients to provide the second aggregated quantity of desired protection using the at least one computer, the balance of ownership being owned by the service provider; and   liquidating a percentage ownership of the first client representing the quantity of desired protection in the first commodity instrument on the payout date provided by the first client.   
     
     
         34 . The method of  claim 33  further comprising the step of selecting an hedge for the service provider. 
     
     
         35 . The method of  claim 34  further comprising the steps of:
 receiving a second quantity of information from a second client comprising a second payout date and a second quantity of desired protection using the at least one computer; 
 determining that a price of purchasing a second commodity instrument is less than a first commodity instrument of the group of commodity instruments owned by the service provider using the at least one computer; 
 purchasing the second commodity instrument using the at least one computer; 
 liquidating the ownership of the first client from the first commodity instrument using the at least one computer; 
 repurchasing the ownership of the first client in the second commodity instrument by the service provider using the at least one computer; and 
 aggregating the second quantity of desired protection of the second client with the second aggregated quantity of desired protection forming a third aggregated quantity of desired protection using the at least one computer. 
 
     
     
         36 . The method of  claim 33  further comprising the step of providing a contract to the first client, a contract price calculated by the computer. 
     
     
         37 . The method of  claim 36  further comprising the steps of:
 calculating a new percentage ownership of the service provider in the second commodity instrument using the at least one computer; 
 selecting a second hedge appropriate for the service provider to provide protection against the percentage ownership in the second commodity instrument using the computer using the at least one computer. 
 
     
     
         38 . The method of  claim 33  wherein the step of receiving a quantity of information from a first user further comprises the step of receiving a percentage of desired protection from the first client.