Posted 7/8/2012 21:23 (#2474337 - in reply to #2474302) Subject: RE: jeremyfrost
onida, south dakota
farming247 - 7/8/2012 21:06
if you where bullish this market what month and strike price would you buy and corn or beans. thanks.
it depends on risk tollerance which is different for everyone
if you are bullish and we are going to run up you would want to buy the front month.........because they will lead when we rally.............but if you are talking about a call options
i would buy at the money sept or august calls................
i might even buy in the money to take the intansic cost down a little bit so for corn maybe a 7.00 August call.........for about 38 cents..........which is in the money by 12 cents so about 26 cents
7.00 Sept corn call is about 50 cents..........in the money by about 12 cents
personally i don't know that i would jump in on the long side..........i would rather wait for a break before getting long because volatilty is very high and options are expensive
but if you are bullish at the money or in the money is the correct move...........
another possiblity might be to due multiple out of the money options trying to get volatile to keep firming up while getting delta and gamma working for you.........but it would depend how high you think things could get and when
as example if you think corn could gain another 2.00 in the next three weeks you could buy the 8.00 August calls for 6 cents a piece or so.........which you could buy 8 of those versus 1 of the Sept 7.00 calls.........
the sept 7.00 calls on another 2.00 rally would make you about 10k per contract
while the 6 8.00 calls would make you 5k a piece or 30k total............so what strike you buy all depends on risk and what you think the market will do.............
jeremyfrost
