Assume you are a Farmer, who must SELL Wheat. Assume you hedge your October $2024$ harvest using October Wheat futures having a contract price of $$5\mathrm{.}50$ per bushel. You hedge $200,000$ bushels. $($Note$-$ assume NO wheat delivery. Answer as if cash payoff outcomes.$)$

a$)$ What futures position should you take?

 b$)$ Suppose Wheat in October ends up ONLY at $$6\mathrm{.}00$ per bushell. Calculate$-$ AND$-$ Explain your ending net overall revenue, again assuming you "get out just before the end"$/$ you do not do wheat delivery .

Answer rating: 100% (QA)

a To hedge the October 2024 harvest using October Wheat futures you should take a short f... View the full answer