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| For those of you who do option spreads to set up your own "min/max" contracts as discussed in the soybean thread below....
I love it in theory and tried some last year on a small scale on soybeans. Did something similar to the long 10.20 put, short 11.00 call, and short 9.00 put as discussed, and it really seemed like an affordable way to get the protection I wanted. The problem I have with it (that is not so obvious when setting it up) is that it is very hard to take advantage of a mid season rally. If and when beans rally to 11.00 or greater during the season, that short 11.00 call is really working against your position (not 1 for 1, but still working against). You could still do a forward contract with your elevator, but then you're no longer "long" the field and you're "naked" on that sold call which could really sting if we'd have a short crop/high prices at expiration.
So how do you sell that rally? I would set up more of these spreads if I could wrap my head around how to take advantage of them. Maybe I just want to have my cake and eat it too :)
Thanks all,
ps. long time reader, thanks to all of you who contribute and make this a great resource!
*edited to say short the 9.00 put, not long as originally posted
Edited by monte 1/29/2017 09:13
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Spread trades using options
