A pig farmer in the US is worried about the price of hogs falling and wants to lock in a price now. In one year the pig farmer intends to sell **1,000,000** pounds of hogs. Luckily, one year CME lean hog futures expire on the exact day that he wishes to sell his pigs. The futures have a notional principal of **40,000** pounds (about 18 metric tons) and currently trade at a price of **63.85** cents per pound. The underlying lean hogs spot price is **77.15** cents per pound. The correlation between the futures price and the underlying hogs price is **one** and the standard deviations are both **4** cents per pound. The initial margin is USD**1,500** and the maintenance margin is USD**1,200** per futures contract.

Which of the below statements is **NOT** correct?