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A farmer is trying to lock in a selling price for soybeans using put options. Suppose the farmer purchased a put option with a strike
A farmer is trying to lock in a selling price for soybeans using put options. Suppose the farmer purchased a put option with a strike of 12 dollar per bushel. The cost of the put is $0.5 per bushel. She then sells a call option with a strike of 15 dollars per bushel. The price for the call is 0.2 per bushel. What is the net cost for establishing this collar? What is the locked-in selling price for this farmer (not considering your net cost for collar for this calculation)?
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