H. Using Futures Options to Hedge (continued)

• To establish a 1:1 Hedge, the developer buys 500 contracts.
  • This establishes a comparative base with the futures contracts.
• 4. The Developer now closes out his position in the options market on August 31 (same as futures example by selling the PUT options he purchased back in March. The price for the December puts is now 3-23

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