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For the following question use an option premium of $3.075/cwt for a $82.000 October 2024 put option. Assume historical expected basis of -$0.80/cwt and
For the following question use an option premium of $3.075/cwt for a $82.000 October 2024 put option. Assume historical expected basis of -$0.80/cwt and a commission is $0.075/cwt to buy an option contract and $0.075/cwt to offset a futures position. A hedger (producer) buys a $82.00/cwt put option on October 2024 lean hog futures. What is their floor price with the option in place? If the October 2024 lean hog futures price falls to $80.000 per cwt, and actual basis equals expected basis, what is their net price? O a. Floor price = $78.050, Net price = $78.050 O b. Floor price = $78.775, Net price = $78.775 O c. Floor price = $77.975, Net price = $77.975 d. Floor price = $84.125, Net price = $84.125 O e. Floor price = $81.050, Net price = $79.050
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