You have some cattle you are finishing and will be selling them in April $2024.$ April $2024$ live

cattle futures are trading at $\frac{158\mathrm{.}625}{c}wt.$ You are looking at premiums on options and debating

whether to use some options. A $158$Apr$24$ Live Cattle put is trading at $3\mathrm{.}900$ and a $158$Apr$24$

Live Cattle call is trading at $4\mathrm{.}000.$ A $161$ Apr $24$ Live Cattle put is trading at $5\mathrm{.}000$ and a $161$

Apr $24$ Live Cattle call is trading at $3\mathrm{.}000.$ You expect basis will be $5\mathrm{.}50$ under when you sell$|$

your cattle. You used 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?

Remember that calls set ceilings and puts set floors. You want the price ceiling to be above

your price floor. $(5$ points$)$

b$)$ Calculate the price floor you set using this fence. $(5$ points$)$

c$)$ Calculate the price ceiling you set using this fence. $(5$ points$)$

d$)$ Suppose the April $2024$ live cattle futures are trading at $160\mathrm{.}500$ when you sell your cattle

and basis is $5\mathrm{.}00$ under.

a$.$ Is your put in or out of the money. Calculate the net gain$/$loss on your put. $(5$ points$)$

b$.$ Is you call in or out of the money. Calculate the net gain$/$loss on your call. $(5$ points$)$

c$.$ Calculate your net selling price for the live cattle. $(5$ points$)$