Trading and Hedging with Agricultural Futures and Options by James B. Bittman

Author:James B. Bittman
Language: eng
Format: epub, pdf
Publisher: Wiley
Published: 2012-09-19T16:00:00+00:00

Prices Rise

As above, assume that the price of November Soybean futures rises to $7.00 and that the Davenport cash price rises to $6.80. With November Soybean futures trading at $7.00 at the expiration of November options, the November 600 Put will expire worthless, and so the cost of 25 cents will be lost. By selling soybeans in the Davenport cash market at $6.80 and writing off as a loss the cost of the 600 Put, Lee can calculate the final sale price of soybeans at $6.55, as shown in Table 9–2C

Table 9–2C Long Put as a Short Hedge: Prices Rise and Basis Weakens

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