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SC Iowa | Pat H.......I sure HOPE there are margin calls on those short call options....that means the market is going back up, and in the scenario I described 50% of the starting bushels did not have futures set..
Let's not worry about the margin calls on the short calls---let's look at what it takes for that position to be wrong at option expiration......we're selling 4.10 calls at 25 cents, so July futures have to be above 4.35 on expiration---and that is 50 cents above Friday's close....
buying calls?? how much are you going to invest and what is your exit strategy?? The single biggest reason for converting to minimum price (sell cash and buy calls) is that you will "lose less" than holding the cash inventory in the bin or putting on a basis contract and riding it out.....I see it time after time after time with basis contracts....they don't get priced and down they go.....have seen some folks take a $2 downward ride on futures without getting out in past couple of years.....yes, a 50 cent call option "looked expensive" at the time, but losing 50 cents is a LOT better than losing $2.....so maybe selling cash and buying calls isn't all bad if one considers the alternatives being considered...
the biggest issue I see with folks in the same condition----they don't have a plan....for a market move in either direction......and cannot bring themselves to break up their position into smaller increments and start moving forward.....
Ray J
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corn- panic or hold
