What form of insurance would you suggest for a producer that wishes to be protected from future price decreases but wants to benefit from any future price increases?
A) Buy a call option on the asset
B) Sell a call option on the asset
C) Buy a put option on the asset
D) Sell a put option on the asset

Question

Quizplus · Accepted Answer

Buying a put option allows the producer to sell the asset at a predetermined price, protecting against price decreases, while still benefiting from any future price increases if the market price rises above the strike price.

What Form of Insurance Would You Suggest for a Producer