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Buxton ND | If you BUY any option for .15 that it your MAXIMUM risk.
If you SELL option and the market goes against your call margin position risk can be huge.
Last winter if one sold bean options for .20-.25 think beans would never rally. Mr Market bent you off the pick-up end gate and gang banged you.
There were many that did this, I know 2 personal and they got blown out of these call options because they could not take the margin calls anymore.
Last winter those that sold cheap/low volatility "naked" call options meaning you did not have the bushels in the bins to cover those calls were taught a very very harsh lesson what Mr. Market can do.
SELLING option is a margin-able position, the most producers out there are not comfortable with margin calls.
Think buying option as your in the drivers seat, think selling option as you can be bent over that sit.
SELLING options I was what buried PFGBest in 2012's drought market, he was tossed in jail a Friday morning and trying to hang him-self that afternoon. | |
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Call risk?
