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| I use KCBOT when I trade so I will give an example using current prices, as of NOW......
July KC Wheat Futures are at $5.586 or $5.58 3/4...............round that to the nearest whole number and youre looking at $5.60 July Futures......................SO lets say you are happy with that and want to "protect" that price...............You can buy an ATM (at the money) PUT OPTION, which is a $5.60 STRIKE PRICE for approx $.584 or fiftyeight and 1/2 cets (if the option was trading, dont think it has traded today yet so used yesterdays closing price for an example).....(all these are bases on 1, 5000 bus contract, so IF you bought the $5.60 STRIKE PUT OPTION it would cost you (5,000 @ $.584) $2920 plus commission.
Basically, VERY BASICALLY, you have the July Futures sold at $5.60.......(of course it cost you $2920 to do that, plus commision).................so now you are free to market your CASH grain wherever........
Very Basic Description
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explain to me using put options, please
