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SE MN | I would say it is a good idea to try it. I have told people the best way to learn how options work is to purchase one and see how it performs. Kind of like playing cards for money, you learn the game real quick.
I used to think options were a waste of money, but now I believe that a person needs to be able to protect the risk of a down market while leaving the top open somehow. Whether that means buying something out of the money or at the money on a portion of bushels, whatever your comfort level is. You may not gain anything, but if you start to understand how price movements on an underlying contract affect the prices of different strike prices on options, how time value erodes, and how uncertainty in the market affects the pricing of options and all it costs you is $.11/bu plus commission on 5,000 bushels that would be cheap education. As long as you are looking at it as insurance or as a way to be more comfortable hedging at a price that works but won't make you rich I don't think you will regret it. I would bet that many people wish they would have sold $4.40 Dec 16 corn and bought a $5.00 call for $.15 cents last year. Yeah it expired worthless. Big deal. | |
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Educate me on call options
