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Northwest Iowa | Pretty broad question. Not to be nit picky but volatility has been low so option premiums are low. Generally, you will find the more out of the money options will be the best sell (or also called writing or written ). Normally, it is nice to be $1.00 or more away from the market. So with may beans at 8.84, the 8.80 call is a little in the money but costs .2675 to buy. Net cost is .2275 as it is .04 in the money. Actually, some manuals would say that is a good value. "If the at the money option can be bought for a price similar to the margin for the contract, go with the option." The 9.80 call is trading (I'd bet very thinly) at .034. That isn't a lot of money, only $175. Granted it is $.96 away. The net cost if one was buying that one is $.995. The market has to get to 9.835 before a buyer of that call makes any money. Writing that call makes sense except that there is not enough money to mess with. If that call was worth .25 or so, I might be interested but looking at the charts and the ownership ( Funds long huge numbers of short or sell positions so who is left to sell?), I have little interest in selling calls. It seems it is not NAT approved to sell puts, but that is probably the side to take. 80-90% of options expire worthless so do not discount using this tool. If a producer has stored grain- sell calls (really need more premium to do this) trying to entice the market to come to you. If the market does come up to the strike you have chosen, sell grain and buy back the sold option. Producer wins! Time is the enemy of option buyers. If the market does not rally, pocket the premium to use against storage costs. | |
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Where would you be a willing seller.....
