NE Oklahoma | milofarmer1 - 11/12/2018 11:39
Did a quick quote on their site insuring steers until May 2019 and they estimated the premium at $4.72 cwt. That is a little more than what you can buy a CME May $1.42 put option for.
If you do buy a put and the underlying futures goes up, you can sell back your put for a partial loss, and roll it up to a higher price. Can't do that with insurance.
Insurance is easy though, you pay a premium and don't have to mess with it.
This insurance only pays you if the CME is less than the premium price you bought that day at closing, that day only regardless if you still have the cattle or not or what wt they are. You will get paid whatever price they bring and whatever you want to sell them. Theoretically if you wanted to speculate you could buy a floor price on cattle you don't even have , if that makes sense |
Insuring cattle floor price
