cropsey, il 61731 | RayJenkins - 12/5/2007 19:33
Sad to say, but I call the minimum price contract in this situation the "lose less option" because in the end, a 15 cent call option expiring worthless is a lot better than selling the corn for 50 cents less than you could have gotten the day the basis contract was initiated...
Good luck in making your decision...
Ray J
Thanks Ray and others who posted. I guess it seems easier to do everything at the elevator, but the minimum price contract (sell cash/buy a call) does everything the basis contract does and more - 100% of the current sale price, set basis, stop storage and participate in future gains if they materialize. The only chink might that the call doesn't gain 1 for 1 in value with the futures. I have not used options in a long time and it might be a viable strategy this time - if I could get a $4.50 call for 15 cents it would be roughly the same as paying storage on unpriced grain for 5 months - which looks like a better situation. I have not looked at option prices, but whats available for 15 cents?
Thanks,
Pat |
Corn basis contract
