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| It seems to me your a little to frugal looking at $10 calls... I don't get why you aren't looking at $5.50, or $6 calls...
The margin will be larger; yes. But you will also be reaping 5-7times the return. Please don't come back with the argument of "what if corn goes to $7.00?" It seems crazy for people to not be working with the 5-7 dollar range options with the premiums they have.
33cents for a $5.50 call
Lets say we go through the same random market as this year, right now $5.50 Dec 10's are worth 7 and 3/4(and that's with some volatility built into them again). I know people can be eternal optimists, but I don't get the point of ignoring almost 30 cents more in premium to potentially be 'stuck' at $5.83 corn if it does head up (obviously this is only about 10-30% of your projected bushels) to 6 or heaven forbid 7 bucks.
Unless the inputs explode over this fall (most of your seed, fertilizer and chemicals should be locked in by winter anyway) I don't believe there is a risk for anyone in this country at getting 'stuck' with $5.83 corn. I would much rather protect the opposite side, but these premiums you have to take some advantage of. | |
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Has anyone looked at Dec 11 options
