A. If the cattle feeder hedged her full cash position, how many put option contracts did she use? (4 Points) Answer: NFC

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A If The Cattle Feeder Hedged Her Full Cash Position How Many Put Option Contracts Did She Use 4 Points Answer Nfc 1 (83.99 KiB) Viewed 11 times

A. If the cattle feeder hedged her full cash position, how many put option contracts did she use? (4 Points) Answer: NFCF = 7 contracts B. Using the following table, calculate the cattle feeder's net realized price per pound of fed cattle from full hedging. Use the April 25 and August 20 cash prices, futures prices, and option premiums as listed on the second page of the spread sheet. Fill the gaps, calculate cash revenue, gain/loss from hedging, and net realized price. (8 Points) Date/Action Apr 25, 2020 Action Aug 20, 2020 Action Cash Market CP= 144.00 cents/lb. None CP 153.00 cents/lb. 200 fed animals @ Revenue from selling cattle Net proceeds Cash revenue + Gains from hedging Net realized price (cents/lb.) Futures Market Dec. 20 CME LC, FP = 141.78 c/lb. Long/Short 7 Put with SP 160 c/lb.at cents/lb. FP 148.45 cents/lb. Exercise/Do not Exercise (delete one) Gain/Loss = Total Gain/Loss c/lb.