On July 1, Farmer McDonald purchased a European put option on 100 tons of wheat from Great Northern Wheat Trading Compan

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On July 1, Farmer McDonald purchased a European put option on100 tons of wheat from Great Northern Wheat Trading Company Thestrike price for this contract is $55 per ton and the expirationdate is September 1 If the 1 September the spot price of wheat is60 Farmer McDonald does not exercise the option and sells his wheaton the spot market On the other hand, if the spot price is $50 perton, the option has a value of 100 ×( 55 -50)= $500 and obviouslyexercised
Therefore, buying an option contract can be seen as a way for thecontract holder to hedge against the risk of having to trade thecommodity at a price less favorable than the spot price.
Perform the exercise, analysis, graphs in excel,etc.