Farmer Jayne Decides to Hedge 10,000 Bushels of Corn by Purchasing

Multiple Choice

Farmer Jayne decides to hedge 10,000 bushels of corn by purchasing put options with a strike price of $1.80.Six-month interest rates are 4.0% and the total premium on all puts is $1,200.If her total costs are $1.65 per bushel,what is her marginal change in profits if the spot price of corn drops from $1.80 to $1.75 by the time she sells her crop in 6 months?

A) $248 loss
B) $0
C) $252 gain
D) $1,500 loss