You are a cattle rancher. To lock in the sale price for your cattle, you could either sell a futures contract on cattle, or buy a futures put option on cattle.

Question

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Selling a futures contract on cattle allows a rancher to lock in a sale price for their cattle at a future date, securing a guaranteed price. Buying a put option gives the right, but not the obligation, to sell at a specific price, offering a way to hedge against price drops while still allowing for profit if the market price is higher. Both strategies can be used to manage financial risk related to fluctuating cattle prices.

You Are a Cattle Rancher