Probability


RISK MANAGEMENT
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Dr. William I. Tierney, Jr. E-mail: wtierney@agecon.ksu.edu Copyright 1998. All rights reserved by author.
Disclaimer: This web page is designed to aid farmers with their marketing and risk management decisions. The risk of loss in trading futures, options, forward contracts, and hedge-to-arrive can be substantial and no warranty is given or implied by the author or any other party. Each farmer must consider whether such marketing strategies are appropriate for his or her situation. This web page does not represent the views of Kansas State University.

Probability distribution of the highs and lows set by the July soybean futures contract

This is a chart of the probability distribution of the highs and lows set by the July soybean futures contract during the period December thru the expiration of the contract in July. The chart is based on data for the last 25 years. Specifically, the chart shows the probability that the contract will achieve a specific high or low price during those months. Notice that in December 1998, there was a high probability that the Dec-Jul high to-date would be exceeded by a higher price (see right side of graph). Similarly, there was a relatively low probability that the Dec-Jul low to-date would be exceeded by a lower price (see left side of graph).