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Buffalo IL | The best way for a cow calf guy to protect price is to not worry about price, but worry about overhead costs. How to increase grazing days, feeding hay less days, good conception and calving percentages, not much equipment, etc. Buying puts can reduce your risk of loss, but if the market goes down you still lose, but you may lose half as much at best. Your best option is to be able to forward price calves if you get the price you want from a buyer. Hard to do. Brokers are always ready to sell options and when you lose sell you more. (being cynical) Actually you do want to lose on puts because hopefully the cash has gone up to offset the loss. You just want the gain to far exceed the loss on the put. I've also decided all market analysts are former weatherman that couldn't predict weather and find that getting the markets right once every ten years makes them an expert for the next 9. | |
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