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| I understand the concept, the trouble with saddles, straddles, spreads, and stirrups (Ok, I made that one up) for me is always how to "unwind" them. If I buy a slightly under the money put, and "cheapen" it up by selling a $6.00 call, how and when do I exit the strategy (I did the same thing with beans in December, we know how that worked out)?
If the price runs up, you will be exposed to margin calls on the sold call, while the purchased put loses value. At some point a person should have a line drawn in the sand, and say when the value of the put is low enough, and the market high enough that I have "max ed out" my upside potential, I would probably want to get out of the position, and sell futures (or price the grain) at that point. I think your upside potential is probably around $5.70, and your downside potential is the commissions and lost time value taken away from the $5.00 put (I think you said $4.75.
Maybe a safer program is just a scaled up (or down) sales plan.
Just my guess
Edited by robheyen 2/4/2008 18:47
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Marketing advice, should I or shouldn't I
