Posted 12/8/2009 10:50 (#955252 - in reply to #955136) Subject: RE: explain to me using put options, please
Monticello IL
When you buy a put you put a floor on the price of corn for a price. Currently the put price for sept corn at 4.00 dollars is around 44 cents. So after paying for the put you net 3.56 as a floor if the put expires worthless. At anytime you can sell that put and get some or your money back. The advantage of a put is if the market goes up you will sell the corn for more, and if the market goes down the put will guarntee a floor. The disadvantage is the cost of the puts. A put contains value relative to the market and also time value. A september put has alot of time value. If you want you can email me it is in my profile.
If you are only talking about a small portion of the crop and are ok with what you can contract for right now then you may be better off foward contracting. I wouldn't want to discourage someone from selling and taking a profit. I think alot of those services have a problem ever getting the crop sold.
explain to me using put options, please
