1. A wheat producer in the Midwest is concerned about his harvest time price but he wants to benefit from any possible wheat price increase, so he decides to buy a put option (December 2020 Futures) to create a price floor. If the strike price he chooses is $6.50/bushel and the premium he pays is $ 0.09 per bushel. What is the price floor he is getting? (his harvest time basis with respect to December futures is 0.10/bushel).

2. An ethanol plant manager is concerned about the future price of corn he needs to buy but he wants to benefit for any possible corn price decline, so he decides to buy a call option (December 20 Futures). He pays a premium of $ 0.06 for a Strike price of $4.10/bushel , and his BASIS ( at the time of corn purchase) with respect to the December Futures is -0.09/bushel. What is the price ceiling he is creating ?