You plan to buy 195 head of feeder cattle or about 150,000 pounds. How many CME Feeder Cattle futures contracts would you buy to hedge the purchase? O3 contracts 04 contracts Os contracts O6 contracts 7 contracts

Q: Backwardation and Contango In January 5th of 2018, you took a short postion on 100 Feeder Cattle…

A: Futures contracts are the derivative contracts that derive their values from the underlying assets.…

Q: You entered into a futures contract to buy €62,500 at $1.20/€ yesterday. Your initial margin was…

A: Initial price= $1.20Future contract size= 62,500Initial margin = $4,200Maintenance margin =…

Q: Maintenance margin = 600$ Assume the volatility of Soybean Oil immediately increases 20%. How will…

A: Margins are set based on risk of market volatility. When the market volatility or price variance…

Q: The contract size for platinum futures is 50 troy ounces. Suppose you need 500 troy ounces of…

A: We have to take a position in the futures of platinum. We have to then determine the profit (loss)…

Q: A trader takes an initial LONG position on seven (7) April 2022 Live Cattle (LEJ22] futures…

A: In mark to market method, the ending account balance is updated each day based on the closing price.…

Q: A farmer sells futures contracts at a price of $6.70 per bushel on 10,000 bushels of corn. The spot…

A: The futures contract refers to the derivative contracts in which two parties of the contract agree…

Q: You buy an American call option priced at $0.025/€ on €225,000 at a strike price of $1.50/€. You…

A: In case of call option , option will be exercised if stock price is more than or equal to the strike…

Q: PLEASE GIVE ME THE RIGHT ANSWERS FOR ALL  DO NOT GIVE ME THE WRONG ANSWER

A: Step 1:   (a) here is the step-by using-step option to decide the required margin to buy one…

Q: Example • A farmer sells two soybean futures contracts at a price of $8.91 per bushel. The spot…

A: 1-2Calculation of Proceeds from Sale:1. The proceeds from sale is $125,300.2. The proceeds from sale…

Q: A dealer is quoting a bid discount of 0.75 and an ask discount of 0.73 on a T-Bill with a maturity…

A: First let us determine the bid ask spread. Bid the amount you receive if you sell a T-Bill and ask…

Q: orn processor will purchase 3 million bu. of corn in one month and hedges against price changes…

A: In this we have to calculate the minimum variance hedge ratio and from that we can get number of…

Q: None

A: Here's how to calculate your net gain over the cash price: Price Gain per Hundredweight (cwt): You…

Q: In January 5th of 2018, you took a short position on 100 Feeder Cattle futures contracts that…

A: Hi there, Thanks for posting the question. But. as per Q&A guide lines, we should answer the…

Q: 1.) The option is currently a.) In-the-money b.) At-the-money c.) Out-the-money 2.) In/At/Out-…

A: Put option is option being provided to the seller of the stock or shares that it gives an option to…

Q: as a soybean buyer, you are concerned about soy prices. Currently, they are at $60 per bushel…

A: The spot price refers to the price used in the market for specified assets such as currency,…

Q: Production Hedge: A cattle producer wanted to purchase the soybean from the market. On February 1,…

A: Prices of commodities fluctuate normally which creates a risk factor for the dealers. Hedging is a…

Q: Consider the following option combination: Long $9 Straddle +1 SK2C90060c +1 SK2P90060c What is the…

A: Long is a position in which the investor opts to buy the stock at a certain price expecting the…

Q: Using the same begging portion of the above problem --A cotton buyer will be making a purchase of…

A: The cash market and future market are related to each other and they move opposite to each other and…

Q: A cheese factory wants to protect their purchase price of milk so they hedge in milk futures at a…

A: Basis in futures is the difference between the futures price and the spot price.It is an important…

Q: Only B There are two apple orchards, in Chicago and NYC. Driving between the apple orchards takes 8…

A: An arbitrage trade is possible if the upfront cost of the truck rental, x, plus the cost of the bet,…

Q: You buy one Yahoo June Call option contract with strike price $50 for premium $1.5 and sell one June…

A: Option strategies are the simultaneous, and often mixed, buying or selling of one or more options

Q: The USDJPY spot price is 115.018 and the one month forward is 115.046. A one month expiration…

A: USDJPY spot price =115.018One month forward rate= 115.046European-style call option…

Q: Q3) Suppose that on November 15th, 2021 a company purchased ( i.e. Ilong) one May 2022 live cattle…

A: A futures contract is a derivative instrument to purchase or sell an underlying asset on a future…

Q: A trader enters into two short cotton futures contracts when the futures price is 80 cents per…

A: A trader enters into two short cotton futures contracts at a contracted price. The gain/loss for the…

Q: A company enters into a short futures contract to sell 25,000 units of a commodity for 70 cents per…

A: Number of Unit = n = 25,000 unitsSelling price per unit = s = 70 cents or $0.70Initial Margin = im =…

Q: A farmer sells futures contracts at a price of $3.65 per bushel. The spot price of corn is $3.15 at…

A: The futures contract refers to the derivative contracts in which two parties of the contract agree…

Q: The option is currently a.) In-the-money b.) At-the-money c.) Out-the-money 2.) In/At/Out- the…

A: The call option give opportunity to buy the currency at the specified price and at specific date but…

Q: You buy a 25, 000 pound copper futures contract at $3.1165 per pound with an initial margin…

A: Size of contract=25000 poundsInitial price= $3.1165 per poundFinal price= $3.06597Initial…

Q: What is the estimated price if this person hedges?

A: The grain farmer has produced 200,000 bushels of corn which he wants to sell next spring. He is…

Q: You decided to speculate in the market and sold 7 platinum futures contracts when the futures price…

A: Total profit or loss on settlement date = Number of contracts*Contract size*(Futures selling price -…

Q: BMW (Germany) owes FORD (US) $100 due in 1 year. The current spot is $1.2/€. BMW wants to use…

A: Given: BMW owes = $100 Spot rate = $1.2 /€ Strike price on call = $1.1/€ Strike price on put…

Q: Suppose a financial manager buys call options on 50,000 barrels of oil with an exercise price of $57…

A: Options Payoff: Options Payoff represents the cumulative dollar amount that an option trader gets…

Q: You have a long position in one soybean futures contract. The initial margin was $3,250 and the…

A: A margin call is occurred when the balance is brokerage account falls below the maintenance margin…

Q: for delivery in December is $1.3890 per pound. Each contract is for 37,500 pounds. Initial margin is…

A: when margin falls below than margin calls can be calculated.

Q: 1.) The option is currently a.) In-the-money b.) At-the-money c.) Out-the-money 2.) In/At/Out-…

A: Call Options: A call option gives the holder the right, but not the obligation to buy the underlying…

Q: 5. On June, an investor bought five (10 tons per contract) of soybean futures at $3,000 per ton.…

A: The variation margin is the additional amount that a broker must pay to clearing houses to bring the…

Q: An Omani importer needs 250,000USD after 60 days. To protect from the risk of appreciation in USD he…

A: Importer need USD 250000 after 60 days Purchased Option Price = 1 OMR = USD 2.5975

Q: In February, a company wanted to hedge the future purchase of crude oil some time in June or July by…

A: Calculate the net cost of purchasing the oil with hedging again:

Q: You long a futures contract for 500 units of silver for $60 per unit. The initial margin is $3,000…

A: Number of units=500 unitsUnit price=$60Initial margin= $3,000 Maintenance margin…

Q: that you enter into a short futures contract to sell July silver for $27.20 per ounce. The size of…

A: Margin is amount required in broker account to keep positions and if not then will broker will call…

Q: Suppose trader A sells a E-miniS&P 500 indexDecember 2021 expiry (ESZ1)futures contract to trader…

A: Hi, since you have posted multiple question, we will answer the first one, as per the authoring…

Q: Dec com futures closed today at $5.76 and you buy three (3) $5.80 put options for $0.47. Because of…

A: Corn option trading insights refer to information, analysis, and understanding that can help traders…

Q: 10. A soybean farmer plans to sell a portion of their crop in October. To set up a short hedge,…

A: Future and option markets Futures and options are derivatives that are traded in the stock market. A…

Q: An investor enters into a long oil futures contract when the futures price is $18.0 per barrel. The…

A: Future contract is defined as the contact that fixes the prices which transaction are executed in…

Q: Suppose that on September 05, 2021, a company takes a short position in one April 2022 live - cattle…

A: To calculate the settlement price at the end of the day, we need to determine the gain or loss on…

Q: For the futures contract the initial margin account is 2% of the fully funded future which is 50000$…

A: Initial Margin is the amount required initially in case of future contracts. Maintenance Margin is…