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The Marketing Puzzle = + Price Kim Anderson

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Presentation on theme: "The Marketing Puzzle = + Price Kim Anderson"— Presentation transcript:

1 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

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

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

4 Actual Dollars/Unit Received
Price Actual Dollars/Unit Received

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

6 Price of a Commodity Futures Contract
Futures Price

7 Difference Between Two Prices
Basis Difference Between Two Prices

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

9 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

10 = + $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

11 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

12 = + $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

13 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

14 = + $4.50 Buy 450 @$0.30 Put Option Futures Price Price Basis
Forward Contract Futures Contract $4.50 Buy 450 @$0.30 Put Option

15 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

16 = + $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

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

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

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