A Study On Hedging Of OTC Options For Agricultural Products

With the gradual maturity of China's capital market,especially the development and maturity of China's four major futures exchanges,the capital market can play an active role in price discovery and risk aversion.Under the government's call and promotion,Zhengzhou Commodity Exchange,Dalian Commodity Exchange,major futures companies and professional investors have developed a series of strategies and products designed to help farmers and agro-industries stabilize future prices of agricultural products and lock in profits.This article will introduce and analyze a new type of agricultural development mode-Nenjiang model-that futures companies use OTC options to help farmers and farms to hedge their agricultural products in the capital market.This article first introduces the current situation of hedging of over-the-counter options on agricultural products at home and abroad.Then specifically introduced the Nenjiang mode of operation and details.Then,with the use of the chart tools and the effect evaluation model of the hedging risk minimization proposed by Edlinde,this paper focuses on the analysis of the risk exposure and hedging effect of the OTC options in the Nenjiang model.It is found that the use of agricultural products in the Nenjiang model The effect of hedging of options is significant,which can effectively help farmers and farms in Nenjiang County hedge the risk of future fluctuations in soybean prices and ensure the profits in the future when selling soybeans.Finally,it analyzes the advantages and disadvantages of the Nenjiang model,as well as the enlightenment and policy suggestions on the development of the Nenjiang model.