Basis data used should correspond to the time the hedge is lifted or completed. Basis can be seasonal and cyclical. 3.55 1.51 1.96 Margin Account Requirements Trading futures contracts requires that a margin account be established. Does not apply to buying options. Does apply to selling options.
Margin accounts ensure financial obligation of contract holder.
Adverse move in prices require additional margin money. Advantageous price move allows contract holder to withdraw margin money. Upon contract liquidation, margin money is used to settle account. A dairy producer wants assurance that milk revenue will cover expected cash costs during the month of December. Table 2 -Hedging with the BFP Futures and Options Contracts Assumptions Per cwt.