Hedging a Producer: Hedge Ratio, Hedged vs. Unhedged Revenue
This lesson is part of the course
In this lesson
You hedge 75% of a farm's corn harvest with short futures and compare hedged and unhedged revenue and price per bushel across six harvest prices.
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Lessons in this course
- Contract Specs: Contract Value, Tick Size & Tick Value Locked
- Futures P&L: Long, Short, per Contract and per Position Locked
- Initial & Maintenance Margin, Mark-to-Market and Margin Calls Locked
- Leverage and Position Sizing from Risk per Trade Locked
- Basis and Convergence: Cash vs. Futures Locked
- Contango, Backwardation and Roll Yield Locked
- Hedging a Producer: Hedge Ratio, Hedged vs. Unhedged Revenue Locked
- Calendar Spreads: Entry, Exit and P&L Locked