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Grand Rapids, MI | I agree, this is good discussion. Its funny that probably one of the best discussion thread on ACRE so far comes with only a week left to sign up.
If the NACP was at $3 and the IL state average was 187 for the year, this would mean a $78/acre ACRE payment if the farm had state average yields. Our IL clients have about a 200 bushel farm olympic average so they would recieve $91. Take off the $5 cost to compare and it is $73 or $86 compared with $102 for the $3.40 puts in this senario. Remember though my example was for what I would consider a quite unlikely price run-up (from $2.25 to $5.25). The fact that it is still close even with this price run-up tells me that I was in the ballpark to say these two options were roughly similar in risk mitigation, do you think?
My main point though was not if it would cost you $50 in puts to equal acre, the point was that $5 in puts would clearly not offer the systemic risk protection that ACRE does. If you think the $50 ballpark number I threw out there is even close to right, I have a 10x factor to be wrong. | |
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ACRE (again)
