experiment with various roasts and blends, thus providing their customers with
trendy, new beverages that increase sales and customer satisfaction.
Since Creolé is required to provide their suppliers with the quantities they will need
in future months, the company attempts to minimize the impact of price
fluctuations with hedges and options in the futures market. Coffee futures and
option contracts are sold at a quantity of 37,500 pounds and prices are quoted in
cents per pound. Delivery is only specified for the months of March, May, July,
September, and December (“Coffee “C”: Futures and Options Contract Highlights”
2002). Table 1 indicates the coffee futures prices for 20022.