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NE SD | They are offering the somewhat of the same thing here also. Example-- I sold corn 5000 bu on friday for jan 09 del at 5.11 cash. With this I pay .10 cent fee (actually they take it out of base price)for there purchase of a at the money dec. 5.50 call. my bare minimum is 5.01 on this deal. I can get penny for penny each cent higher than 5.50 and can exersise this when ever I want. Now heres the other side of this deal. If dec corn closes at or above 7.00 dollars on nov. 21st I have to deliver another 5000 at 7.00/bu minus basis of course. It is a really good deal and people are jumping all over it. You have to be a little careful though as it could be a double delevery.
I am not sure on this but I think what they are doing is buying at the money dec call and selling two 7.00 calls for each contract they set up this way as it is 5000bu min.. I could not do this myself this cheap or even close. They are taking some risk with the selling of calls but they must feel safe that far above the market. I want to do more but am a little scared but it does cover and weather rally all summer. Basis is also a set price so can't gain there either.
They need lots of corn and this is one way they can get it.
Jerry | |
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I have a marketing question...
