West KY, Miss River County | I try to make some call sales each year as an early part of my sales program. I try to sell a call approximately $1 above current price for .75+, preferably closer to $1.
With Dec 10 @ 455, I am looking to sell a 540 call for .75 or more. Currently it will bring only .33. Obviously, not time right now. The last two years I have met my target in the Feb-Mar time frame in either the corn or beans.
If prices start up, I would cover the calls by going long the Dec contract around $5.00. I don't loose on the call unless it goes above 6.15 (This was originally covered by an anticipated long crop). So @6.15 my resulting income would be 6.15+1.15 (from long futures) or 7.30, less basis. As long as I maintain the long contract, my net position stays at 7.30, and I won't get an additional margin call.
If the Mkt Starts down, exit the long contract.
If you don't understand my action, or disagree with me, don't enter this trade. I have found it very profitable, your results could vary.
Edited by Ranchhand 1/7/2010 00:56
|
Option adv ice
