Analyzing Option Strategies for GreenHarvest Corp

A major global agricultural firm, GreenHarvest Corp, is expecting significant volatility in the prices of its primary crop, soybeans, due to an impending weather report predicting unusual patterns. The firm is considering various option strategies to hedge against this uncertainty while also positioning itself for potential upside.

The firm currently holds 10,000 contracts of soybean futures, which are trading at $10 per bushel. GreenHarvest is contemplating three potential strategies:

• A long straddle using call and put options at a strike price of $10, expiring in three months.

• A long put option with a strike price of $9, which would provide downside protection.

• A long call option with a strike price of $11 to capitalize on a potential price increase.

Discuss the advantages and disadvantages of each option strategy in the context of volatility and the firm's goal of managing risk while also seeking potential profits. Include an analysis of the scenarios under which each strategy would either succeed or fail, and provide a recommendation based on your analysis.