Can Options Be Used as a Hedging Instrument?

Yong Sakong, Dermot Hayes and Arne Hallam ()

Center for Agricultural and Rural Development (CARD) Publications from Center for Agricultural and Rural Development (CARD) at Iowa State University

Abstract: We develop a portfolio choice model for farmers faced with both price and production uncertainty who can hedge this uncertainty using both options and futures contracts. We then simulate the decision process of a typical Iowa farmer and derive his or her optimal options and futures position.

Date: 1992-01
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Persistent link: https://EconPapers.repec.org/RePEc:ias:cpaper:92-wp85

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