Consider a producer who is in the business of producing Cocoa for future sale. At the time of $0($i$.$e$.,$ present time$),$ we have S$(0)=$ $$1652,$ F$(0)=$ $$1675.$ The firm is expecting to sell the Cocoa in $2$ months, while the delivery date of the futures contract is $3$ months away. Assume that the price of Cocoa in two months is unpredictable, but we know that the future price in two months will be $$8$ higher than the spot price of Cocoa in two months $($i$.$e$.,$ F$($t$)=$ S$($t$)+$ $$8).$What would be a good hedging strategy in order to minimize the commodity price

risk that the firm faces $($by utilizing futures contract$)?$

A$)$ At $T=0,$ the firm sells a futures contract. And at $T=t($i$.$e$.,$ in two months

from today$),$ the firm offsets the transaction in the futures market and buys

the Cocoa in the spot market as planned.

B$)$ At $T=0,$ the firm sells a futures contract. And at $T=t($i$.$e$.,$ in two months

from today$),$ the firm offsets the transaction in the futures market and sells

the Cocoa in the spot market as planned.

C$)$ At $T=0,$ the firm buys a futures contract. And at $T=t($i$.$e$.,$ in two months

from today$),$ the firm offsets the transaction in the futures market and buys

the Cocoa in the spot market as planned.

D$)$ At $T=0,$ the firm buys a futures contract. And at $T=t($i$.$e$.,$ in two months

from today$),$ the firm offsets the transaction in the futures market and sells

the Cocoa in the spot market as planned.

E$)$ None of the above.