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NC Iowa | I view buying "put" options as buying insurance against a down markets. It is expensive in my opinion. Selling a "call" is like selling insurance against an up market. The insurance company will make money year in and year out with the rear exception of that one odd time. The one odd time could be very expensive. But if you have grain in the bin or field to protect yourself you should win in the long run. Like some of the others said BE CAREFUL and don't sell more insurance then you can comfortable cover.
It is a tool you can use to add value to some of your grain that you plan on storing for an extended period. If you always store corn into the summer you may as well have it work for you a little. Sell a "call" out of the money at a price you would truly be glad to get for those bushels that you are going to store into the summer. You have to store those bushel then to protect yourself. If you need to sell those bushels for what ever reason then you need buy the "call" back and take your lumps. You should still have come out alright because of the time value that you have gained.
I could go on and on but I type to slow and it's chore time. Love seeing how other people feel. | |
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Selling calls
