IDEAS home Printed from https://ideas.repec.org/p/ags/ncrone/18949.html
   My bibliography  Save this paper

The Value of Deregulating Over-The-Counter Options

Author

Listed:
  • Frechette, Darren L.
  • Novak, Jason A.

Abstract

Hedgers located far from organized commodity exchanges suffer the mismatch between their local prices and exchange prices. Futures and options traded on the exchange may still be valuable to distant hedgers but only to the extent that basis risk is small. Forward contracting allows hedgers to manage risk using a local delivery price, but the CFTC has long banned the sale off-exchange options, limiting the opportunities available to hedgers. Recently, Agricultural Trade Options (ATOs) have been introduced as over-the-counter option products designed specifically for hedgers. To date, ATOs have found little interest from potential sellers, but the potential demand for these options may be substantial. This paper describes and quantifies the demand for corn ATOs by dairy farms in Southeastern Pennsylvania and estimates the value these farms might place on options contracts offered locally.

Suggested Citation

  • Frechette, Darren L. & Novak, Jason A., 2001. "The Value of Deregulating Over-The-Counter Options," 2001 Conference, April 23-24, 2001, St. Louis, Missouri 18949, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    • Handle: RePEc:ags:ncrone:18949
    DOI: 10.22004/ag.econ.18949
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/18949/files/cp01fr01.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.18949?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    Marketing;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:ncrone:18949. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/dauiuus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.