At the end of six months for a wheat farmer who sold previously a 6 month wheat futures contract,he may:

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Quizplus · Accepted Answer

If the farmer chooses option C, they can sell their wheat in the spot market at the prevailing market price and then buy an identical futures contract to the one they previously sold, effectively canceling out their original contract. This allows them to lock in a price for their wheat while also taking advantage of any price gains that may have occurred during the contract period. Option A is also technically possible, but it assumes that the farmer wants to deliver their wheat rather than sell it. Option B is not a good choice because it leaves the farmer exposed to price risk without any hedging. Option D is not necessarily true and depends on the price fluctuations of the wheat market during the contract period.

At the End of Six Months for a Wheat Farmer