Author : Joseph L. Parcell
Publisher :
ISBN 13 :
Total Pages : 2 pages
Book Rating : 4.:/5 (859 download)
Book Synopsis Introduction to Hedging Agricultural Commodities with Options by : Joseph L. Parcell
Download or read book Introduction to Hedging Agricultural Commodities with Options written by Joseph L. Parcell and published by . This book was released on 2011 with total page 2 pages. Available in PDF, EPUB and Kindle. Book excerpt: Producers of agricultural commodities regularly face price and production risks. Furthermore, increased global free trade and changes in domestic agricultural policy have increased these risks. As the variability of price increases the variability of revenue, producers are realizing the importance of risk management as a component of their management strategies. One means of reducing these risks is through the use of the commodity futures (or should this be options?) exchange markets. Like using car insurance to hedge the potential costs of an accident, agricultural producers can use the commodity options markets to hedge the potential costs of commodity price volatility. As when gains from a car insurance claim might not exceed the cost of the cumulative sum of premiums, that gains from hedging agricultural commodities might not cover the costs of hedging. The primary objective of hedging is not to make money but to minimize price volatility. This guide provides an overview of hedging to aid producers in evaluating hedging opportunities.