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Northwest Iowa | You are looking at it correctly. Be aware that the sold call does expose risk. It can be managed but be aware. Compare the deltas and you would have the "At the money"call at maybe 65%. The out of the money would be maybe 10%. The delta reflects the amount that the option value changes in comparison to the futures price change. It has been a while since I have brokered but I am not sure you can use the equity in the purchased call to offset the margin call in the sold call. Might need to pay additional margin. The net result is fine but between here and there, margin calls may show up. If you want more bang for your buck, go to the July contract so you don't have as much of your money invested in time. | |
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Bean hedge
