The Marketing Puzzle = + Price Kim Anderson

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Presentation transcript:

The Marketing Puzzle = + Price Kim Anderson Futures Price Futures Contract Put Options Basis + Forward Contract Call Options Cash Price The Marketing Puzzle Price Kim Anderson Cooperative Extension Crop Marketing Specialist Oklahoma State University

+ = Call Options Forward Contract Futures Price Put Options Basis Futures Contract Price =

= + Futures Price Price Basis Call Options Put Options Forward Contract Futures Contract Call Options Put Options

Actual Dollars/Unit Received Price Actual Dollars/Unit Received

= + Basis Futures Price Price $4.10 $4.50 -$0.40

Price of a Commodity Futures Contract Futures Price

Difference Between Two Prices Basis Difference Between Two Prices

= + Basis Futures Price Price $4.10 $4.50 -$0.40

A Contract requiring delivery (acceptance) of a specified quantity and quality of a specified commodity during a specified period at a specified location, at a specified price. Forward Contract

= + $4.25 $4.75 -$0.50 $4.25 Forward Contract Futures Price Price Basis Futures Price $4.25 Price Forward Contract $4.75 -$0.50 $4.25

A contract requiring delivery (short/sold) or a acceptance (long/bot/buy) of a specified quantity and quality of a commodity during a specified delivery period at a specified location, at a specified futures contract price. Futures Contract

= + $4.10 $4.50 -$0.40 $4.50 Futures Contract Futures Price Price Basis Futures Price $4.10 Price $4.50 Futures Contract -$0.40 Forward Contract $4.50

A contract which gives the buyer the "right" to sell a specified Futures Contract at a specified price. Premium (value) increases as price decreases. Put Options

= + $4.50 Buy 450 @$0.30 Put Option Futures Price Price Basis Forward Contract Futures Contract $4.50 Buy 450 @$0.30 Put Option

Premium (value) increases as price increases. A contract which gives the buyer the "right" to buy a specified Futures Contract at a specified price. Premium (value) increases as price increases. Call Options

= + $4.50 Buy 450 @$0.30 Put Option Call Option Futures Price Price Basis Futures Price Forward Contract Futures Contract $4.50 Call Option Buy 450 @$0.30 Put Option

+ = Call Options Forward Contract Futures Price Put Options Basis Futures Contract Price =

= + Futures Price Price Basis Call Option Put Option Forward Contract Futures Contract Call Option Put Option