Evaluate a future sale of a commodity such as wheat with a floor and short-range forward positions.
Question:
Evaluate a future sale of a commodity such as wheat with a floor and short-range forward positions.
a. Select a commodity that has a futures options contracts on it.
b. Use the SECF screen to find the tickers for futures, futures options, and spot contracts.
- For futures options: SECF ; select "Commodities" from the "Category" dropdown; and then click the "Opt" tab. - For spot position: select "Commodities" from the "Category" dropdown and then select "Spot" from the "Instrument" tab.
c. Upload the spot commodity's menu screen: Commodity Ticker or Commodity Ticker (e.g., WEATTKHR for wheat).
d. Bring up the OSA screen for the loaded commodity and select a position (e.g., 5,000 bushels to sell). Evaluate the position at different dates (Click "Scenario Chart" tab).
e. From the red "Positions" tab on OSA, click "Add Listed Options" and then the futures ticker in the upper-right amber area box (e.g., W A for CBT wheat futures contracts).
f. Select the call and put options on the futures needed to evaluate the insurance and short-range forward contracts. g. On the OSA screen, set the number of long puts needed to insure the commodity sale and the number of short calls needed to set up the short-range forward position. h. Click "Scenario Chart" tab and input setting: profit/loss, market value, range (-20\% to 20\%), and evaluation dates.
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