Cotton options on futures began trading in the fall of 1984 offering cotton producers an alternative risk management tool. Advantages of hedging with cotton options include limiting risk, preserving unlimited profit potential, providing increased marketing flexibility and greater liquidity. This study compared selected cotton option hedges utilizing mean net revenues and standard deviations. Actual versus computed premiums were calculated with a modified Black - Scholes option pricing model using selected historical volatilities for each strike price daily, to determine fair market value for cotton options.