USA | thunderhut - 11/27/2022 07:43
An example-
Original hta and put strike are $10
You collect $1.32 in carry and put premiums
In flat market your price is $10 +$1.32=$11.32
If market goes up $5 your price is $11.32
If market goes down $5 your price is $6.32
You should also factor in storage costs and interest.
HTAs and puts were not done @ the same time. HTAs were the results of Min Max pricing contracts. HTA price was set by the pricing period. Puts were not sold after HTAs were already in place.
For example Sep wheat HTA that has been rolled from July is $9.
Sep $8 puts were sold for 20 cents net. Hta is now $9.20 . If @ expiration Sep $8 puts expire in the money. $8 puts would buy back the $9.20 HTa for $1.20 profit. The $1.20 would then be added to whatever the wheat is sold for . If Puts expire worthless , roll to Dec for Plus 20 and sell $ 8 Dec puts for 30 cents= $9.70 Dec HTA. |