Question $3$

Suppose you purchased an $860$ May wheat call for $766$ to hedge your April wheat purchase. Basis is $5$ cents under.

Calculate your price ceiling or maximum net purchase price. $(5$ points$)$

For each of the May wheat futures price determine your net purchase price. The net$/$gain loss on the call is intrinsic value$-$premium

paid. Basis is $5$ cents under. $(20$ points$)$