Can Options Be Used as a Hedging Instrument?

Yong Sakong, Dermot J. Hayes, Arne Hallam
January 1992  [92-WP 85]

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.

Full Text 658 kB