It is April, and Hans Anderson is planting his barley crop near Plunkett, Saskatchewan. He is concerned about losing his

farm if his operations result in a loss at the end of the season. He expects to harvest $3,000$ tonnes of barley and sell it in

October. Futures contracts are available for October delivery with a futures price of $$200$ per tonne. Options with strike

price of $$200$ per tonne are also available; puts cost $$15$ and calls cost $$20.$

a$.$ Describe how Hans can fully hedge using futures contracts.

b$.$ Given the strategy in $($a$),$ what will be the total net amount received by Hans $($for all $3,000$ tonnes$)$ if the price of barley

in October is as follows:

i $.$ $$150$ per tonne; ii$.$ $$200$ per tonne; iii. $$250$ per tonne

c$.$ Describe how Hans can fully hedge using options.

d$.$ Given the strategy in $($c$),$ what will be the total net amount received by Hans $($for all $3,000$ tonnes$)$ if the price of barley

in October is as follows:

i$.$ $$150$ per tonne; ii$.$ $$200$ per tonne; iii. $$250$ per tonne

e$.$ Hans has asked for your advice regarding hedging. Discuss how the each of the following individually will influence

a$.$ Determine how Hans can fully hedge using futures contracts.

A$.$ Hans can wait until prices rise in the future.

B$.$ Hans can take an intermediate position in futures on $3,000$ tonnes of barley for delivery in October.

C$.$ Hans can take a long position in futures on $3,000$ tonnes of barley for delivery in October.

D$.$ Hans can take a short position in futures on $3,000$ tonnes of barley for delivery in October.