|
| Here is one way you should NOT be managing your risk this time of year in my opinion.
With prices depressed and implied volatility low, right now is not the time to be using strategies that use short implied volatility because seasonally as we get into March, our markets can get more volatile with the ending of bean harvest in South America and as we roll into the second corn crop growing season portion where we determine what they are going to raise.
This time frame for their second corn is the equivalent to our July. Then we have the March 31st USDA acre report.
Then when we really get into our growing season, this will all add to volatility. So you will want to stay away from the crap some of these buyers try to sell you such as accumulators.
The time to do accumulators and to sell calls is when implied volatility gets higher. Typically it starts to raise from now until we get into June and July. The best time to use accumulators will typically be in June and July, which is typically the weather scare season.
So this is one way not to get taken advantage of by Big Ag. Do not use accumulators or sell calls when implied volatility is low. Implied volatility means the market is not expecting big moves which lowers the price of options.
If you have questions, before you do an accumulator with a buyer that may have motivation to buy your grain cheap, feel free to reach out and we will give you an unbiased opinion.
We talked about this more in yesterdays market update where we also went over the recent winter heat, South America, and more for those interested
Read Here: https://txt.so/o4wGYT | |
|
Elevator contracts WRONG time to use
