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| I believe you could either buy puts, to set a floor price, or sell cash (maybe HTA would be preferable), and by calls on those bu above the coverage guarantee. If you think of it as a whole crop approach, divide the cost of the "over" bu option cost by the entire bu sold. This means the cost per bu becomes quite small. You actually could put the additional option cost in a "basis" category.
For example, if your average is 150 bu., and you buy 80% CRC/RA, then the buy put options on the remaining 20% of expected bu., your per acre cost is minimal. Then, if the price is higher in the fall, and you produce the bu., you participated in the higher market. If price is higher, and you don't have the bu., you are only out the cost of the puts on 20%, spread across the entire crop. And if the price is lower, you have protected those additional bu., minus the cost of 20% production on puts. And, finally, if the price is lower, and you don't have the bu., both revenue coverage and the puts will pay you (minus original cost of the puts)
My opionion | |
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Price protection for bushels beyond APH
