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| There is nothing wrong with your math as long as beans go up after you buy out of your contract. What happens if the day you buy out happens to be the highest day of the year? Would you not have been better off to buy out later after the price had gone back down?
If the harvest price is lower than or equal to the base price, your method assures you of a $2 loss while my method does not have a loss. If the harvest price is higher than the price you buy out at, your method assures a profit while I would break even.
In this environment, my method reduces upside financial potential, but it also reduces the risk of downside potential. Base hits rather than home runs for me. At least that's what I keep telling myself. | |
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Cash contracts that can't be filled
