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Central Missouri | I do them under 2 conditions. First is high prices and expecting lower prices at delivery. Second is after a rally in a falling market.
I did a couple in 22 on wn24 futures, rolled the futures at carry and locked in the basis in november for j/f/m delivery, wheat being delivered now. For 8.75-9.00 fob
Did some on the may wheat rally this past may for july 25. I plan to roll futures to march 26, set basis next fall. Double up on those is over 8.00.
I only do it on max 30% aph as can get doubled to 60%. I only do it in a high or falling market with expectations of lower prices at contract period.
Any sales beyond 30% i do in futures account so no true delivery obligation or i buy calls to cover the double up.
You can do these using short dated new crop options and if you dont get doubled up at option expiration you can sell calls against them to add to price but you then reinstill the double up.
I dont do them when prices are low. | |
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ADM 1x2 contract--anyone done this?
