You grow wheat on 1,250 acres near Normal, Illinois. It is late May. You just finished planting. Your typical yield is 32 bushels per acre, so you expect to harvest 40,000 bushels in the fall. You worry that the price of wheat might decline and you want to hedge your price risk. Wheat futures contracts trade on the CME. The wheat contract calls for the delivery of 5,000 bushels. To hedge the price risk, should you buy or sell December wheat futures? How many contracts should you trade? Responses

a sell 7

b buy 7

c sell 8

d buy 8