Question 1 You have some cattle you are finishing and will be selling them in April 2020. April 2020 live cattle futures are trading at 126.250/cwt You are looking at premiums on options and debating whether to use some options. A 122 Apr 20 Lives Cattle put is trading at 3.125 and a 122 Apr 20 Live Cattle call is trading at 6.350 A 130 Apr 20 Live Cattle put is trading at 6.500 and a 130 Apr 20 Live Cattle call is trading at 2.775 You expect basis will be 5.00 under when you sell your cattle. You use options to set a fence for your cattle sale, a) Which option will you buy and which one will you sell to set the fence for you cattle sale? (5 points) b) Calculate the price floor you set using this fence (5 points) c) Calculate the price ceiling you set using this fence points) d) Suppose the April 2020 live cattle futures are trading at 132.000 when you sell your cattle and basis is 500 under a. Calculate the net gain loss on your put. 5 points) b. Calculate the net gain loss on your call. (5 points) c. Calculate your net selling price points) Question 2 You have some cattle you are finishing and will be selling them in April 2020. April 2020 live cattle futures are trading at 126 250/cwt You are looking at premiums on options and debating whether to use some options A 122 Apr 20 Lives Cattle put is trading at 3.125 and a 122 Apr 20 Live Cattle call is trading at 6350. A 130 Apr 20 Live Cattle put is trading at 6.500 and a 130 Apr 20 Live Cattle call is trading at 21775. You expect basis will be 5.00 under when you sell With th catti your cattle. You hedge a) Suppose the April 2020 live cattle futures are trading at 132.000 when you sell your cattle and basis is 5.00 under Calculate is your net selling price given the hedge using the April 20 live cattle futures. (10 points) Question 3 You have some cattle you are finishing and will be selling them in April 2020. April 2020 live cattle futures are trading at 126.250/cwt. You are looking at premiums on options and debating whether to use some options. A 122 Apr 20 Lives Cattle put is trading at 3.125 and a 122 Apr 20 Live Cattle call is trading at 6350. A 130 Apr 20 Live Cattle put is trading at 6.500 and a 130 Apr 20 Live Cattle call is trading at 2.775. You expect basis will be 5.00 under when you sell your cattle. You purchase the 130 Apr 20 Live Cattle put a) Calculate the price floor you set when you purchased the put (5 points) b) Suppose the April 2020 live cattle futures are trading at 132.000 when you sell your cattle and basis is 5.00 under. Will you exercise your put? Why or why not? (5 points) c) Calculate your net selling price. (5 points) Question 4 It is November 21" and July soybean futures are trading at 9452. A 900 July soybean put is trading at 16 2 and a 900 July soybean call is trading at 59'5. A 980 July soybean put is trading at 59'3 and a 980 July soybean call is trading at 23 3. a) Suppose you will be selling soybeans in July and you hedged your soybean purchase on November 21 with the July soybean futures contract. When you sell your soybeans the July soybeans futures are 9462 and you received 8312 cash for the soybeans. How much is your basis when you sold the soybeans? Calculate net selling price for the soybeans? (10 points) b) Suppose you set a fence for your soybean sale on November 21" Calculate the maximum selling price set by the fence? Calculate the minimum selling price set by the fence? Use the basis you calculated in part a. of question 4. (10 points) c) When you sell your soybeans the July soybeans futures are 946'2 and you received 8312 cash for the soybeans. You had set your fence in part b. Calculate the net gain loss on you put. Calculate the net gain loss on your call. Calculate your net selling price (15 points) Question 1 You have some cattle you are finishing and will be selling them in April 2020. April 2020 live cattle futures are trading at 126.250/cwt You are looking at premiums on options and debating whether to use some options. A 122 Apr 20 Lives Cattle put is trading at 3.125 and a 122 Apr 20 Live Cattle call is trading at 6.350 A 130 Apr 20 Live Cattle put is trading at 6.500 and a 130 Apr 20 Live Cattle call is trading at 2.775 You expect basis will be 5.00 under when you sell your cattle. You use options to set a fence for your cattle sale, a) Which option will you buy and which one will you sell to set the fence for you cattle sale? (5 points) b) Calculate the price floor you set using this fence (5 points) c) Calculate the price ceiling you set using this fence points) d) Suppose the April 2020 live cattle futures are trading at 132.000 when you sell your cattle and basis is 500 under a. Calculate the net gain loss on your put. 5 points) b. Calculate the net gain loss on your call. (5 points) c. Calculate your net selling price points) Question 2 You have some cattle you are finishing and will be selling them in April 2020. April 2020 live cattle futures are trading at 126 250/cwt You are looking at premiums on options and debating whether to use some options A 122 Apr 20 Lives Cattle put is trading at 3.125 and a 122 Apr 20 Live Cattle call is trading at 6350. A 130 Apr 20 Live Cattle put is trading at 6.500 and a 130 Apr 20 Live Cattle call is trading at 21775. You expect basis will be 5.00 under when you sell With th catti your cattle. You hedge a) Suppose the April 2020 live cattle futures are trading at 132.000 when you sell your cattle and basis is 5.00 under Calculate is your net selling price given the hedge using the April 20 live cattle futures. (10 points) Question 3 You have some cattle you are finishing and will be selling them in April 2020. April 2020 live cattle futures are trading at 126.250/cwt. You are looking at premiums on options and debating whether to use some options. A 122 Apr 20 Lives Cattle put is trading at 3.125 and a 122 Apr 20 Live Cattle call is trading at 6350. A 130 Apr 20 Live Cattle put is trading at 6.500 and a 130 Apr 20 Live Cattle call is trading at 2.775. You expect basis will be 5.00 under when you sell your cattle. You purchase the 130 Apr 20 Live Cattle put a) Calculate the price floor you set when you purchased the put (5 points) b) Suppose the April 2020 live cattle futures are trading at 132.000 when you sell your cattle and basis is 5.00 under. Will you exercise your put? Why or why not? (5 points) c) Calculate your net selling price. (5 points) Question 4 It is November 21" and July soybean futures are trading at 9452. A 900 July soybean put is trading at 16 2 and a 900 July soybean call is trading at 59'5. A 980 July soybean put is trading at 59'3 and a 980 July soybean call is trading at 23 3. a) Suppose you will be selling soybeans in July and you hedged your soybean purchase on November 21 with the July soybean futures contract. When you sell your soybeans the July soybeans futures are 9462 and you received 8312 cash for the soybeans. How much is your basis when you sold the soybeans? Calculate net selling price for the soybeans? (10 points) b) Suppose you set a fence for your soybean sale on November 21" Calculate the maximum selling price set by the fence? Calculate the minimum selling price set by the fence? Use the basis you calculated in part a. of question 4. (10 points) c) When you sell your soybeans the July soybeans futures are 946'2 and you received 8312 cash for the soybeans. You had set your fence in part b. Calculate the net gain loss on you put. Calculate the net gain loss on your call. Calculate your net selling price (15 points)