Two 6-month corn put options are available. The strike prices are $1.80 and $1.75 with premiums of $0.14 and $0.12, respectively
Total costs are $1.65 per bushel and 6-month interest rates are 4.0%. Farmer Jayne wishes to hedge 20,000 bushels for 6 months. What is the highest profit or minimum loss between the two options if the spot price in 6 months is $1.70 per bushel?
A) $88 loss
B) $88 gain
C) $496 loss
D) $496 gain
B
Business