For a hedge to work, the futures contract must continue until actual delivery takes place.

Name: For a hedge to work, the futures contract must continue until actual delivery takes place.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The person who sells the contract does not need to have actual possession of the corn, nor does the purchaser of the contract need to plan on taking possession of the corn. Almost all commodities futures contracts are closed out or reversed before the actual transaction is to occur.

For a Hedge to Work, the Futures Contract Must Continue