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Holland, Indiana (SW IN) | I want to post this just because I have did this and survived. And I keep reading about option spreads Heck buy a put, sell a call no out of pocket cost or very little cost -sounds great
#1 I am pretty old ---and no I don't think that makes me smart just scarred up from bad judgement.
#2 My NUTS or what ever you want to call it just aren't as big as they were.
#3 I don't have a very good memory --some times good some times bad.
Cant remember the year but we were paying for the Brock report--(every time I read his name flashbacks)
Brock's recommendation buy 1 put sell 2 calls against it (no out of pocket costs) --buy the puts on 50% of the crop, so in effect selling calls on 100% of the crop
Wish I could remember the year but IIRC could get no less than 2.50 for corn on 50% of the crop--- if price went up-- 100% sold on corn at the great price of $3.00--- Dec options-- at that time hadn't seen $3.00. for quite some time and $3 was by no means expected. We would make $ at $2.50 corn.
I had a backup plan if margin calls get more than we could stand get out and do a HTA with ADM pay the cost of the HTA-- keep our hedge on as is needed--- when hedged stay hedged --I was that smart.
NO WE DID NOT sell calls on 100% but it was a substantial amount and yep we had plenty of $ to meet margin. I was ready
It seemed like every morning I sent over 50K to our broker, my parents were still alive then and they understood hedges and meeting margins (pretty impressive for some one that old) ---BUT when a person has sent more in margin than you ever expect to make in a lifetime it begins to affect even the most tough minded person. My father had enough---- time for my backup plan.
I called ADM talked to their most seasoned trader - I think I could hear the fear in his voice --he was worried about defaults on HTA's they already had in effect ---they had quit doing HTA's --heck they weren't even writing contracts for 5 month out delivery with a terrible basis.
EVERY THING worked just like it should-- as most always when things are bleakest change happens. We made $ -- and got rid of the Brock report.
I had to post this - I read on NAT about option spreads-- when a person tries to get costs of insurance (IMO options are insurance if looked at as anything else--- asking for trouble) down to $0 you are not buying insurance.
I like NAT and try to help when I can - things can get ugly pretty quick if not ready for the unexpected.
Hope this helps some one--- Dan
Edited by Dan Loehr 1/29/2017 14:17
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Selling calls READ THIS
