Starbucks is considering buying 100 tons of coffee the, Financial Management

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Starbucks is considering buying 100 tons of coffee the

Starbucks is considering buying 100 tons of coffee. The current price of one coffee ton is $20,000. The amount is due in six months from today. The 6-month forward price of the coffee ton is $22,000. What should Starbucks treasurer do to hedge his prospective transaction? What’s your recommendation?

Assume the following :

Strike price of the call option on Coffee ton = $20,000 (premium = 3%)

Strike price of the put option on Coffee ton = $20,000 (premium = 2.4%)

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