In the global energy marketplace, refined products such as kerosene (often referred to as jet fuel for aviation) can be notoriously difficult to hedge with exchange - traded derivatives. Unlike crude oil benchmarks — such as West Texas Intermediate (WTI) or Brent — that enjoy deep, liquid markets, refined products sometimes lack sufficiently active futures or options, leaving airlines, refineries, and other stakeholders exposed to undesirable price volatility. This thesis investigates whether one can replicate the payoff of a hypothetical kerosene call option using the more liquid WTI options, thereby providing market participants a practical hedge alternative in the face of kerosene’s illiquidity. In sum, this introductory chapter has set the stage for a deep exploration of how a synthetic kerosene call option might be fashioned from WTI options. By contextualizing the research problem within the broader literature on derivative replication and cross - hedging, we have emphasized both the economic need (lack of direct kerosene options) and the theoretical rationale (cointegration between refined product and crude benchmarks). The chapters that follow will detail the empirical strategy — ranging from stationarity tests to optimization - based payoff calibration — and ultimately assess its real - world viability by applying the best - fit hedges on out – of - sample data. In this way, the thesis contributes to a nuanced understanding of commodity market hedging, bridging classical no - arbitrage theory with the practicalities of cross - commodity basis risk. While perfect replication of an illiquid refined product option may remain elusive, the analysis reveals how partial replication — guided by careful econometric checks and robust optimization — can significantly mitigate risk for industrial players who otherwise face unhedged exposure to volatile refined product prices.