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| IF THEY ARE HEDGES, THEN YOU HAVE NO CHOICE BUT TO STICK W/ THEM!! CHOICES INCLUDE: 1) SEND MARGIN $$ TO CHICAGO REGARDLESS OF HOW MUCH IT TAKE OR HOW LONG IT TAKES(OFSET WHEN YOU SELL THE CASH BUSHELS). 2) EXCHANGE FUTURES W/ AN ELEVATOR THAT YOU WORK WITH AND TRUST--THIS ESTABLISHES THE POSITION IN THEIR ACCOUNT AND THEN THEY HAVE TO COME UP W/ THE MARGIN MONEY, YOU HAVE A CASH CONTRACT TO DELIVER ON WHEN YOU GET THE BUSHELS.
YOU WILL NOT LIKE THE LAST CHOICE, BUT IT IS A CHOICE...
...TRADE OUT OF THE POSITION AFTER HAVING PAID FOR THE MARKET TO MOVE AGAINST YOU(your price is a good price). IF THE MARKET CONTINUES HIGER UNTIL YOU PUT THE HEDGE BACK ON, YOU ADD AMOUNT YOU GAINED(SEE BELOW) TO YOUR $6.20 PRICE BE HAPPY. IF THE MARKET MOVES BACK LOWER YOU LOSE BIG TIME(SEE BELOW).
MARKET CONTINUES HIGHER
ORIG HEDGE: $6.20
LIFTED @: $7.20
PUT BACK ON: $8.00
GAIN: $0.80
NET PRICE: $7.00
MARKET MOVES LOWER
ORIG HEDGE: $6.20
LIFTED @: $7.20
PUT BACK ON: $6.00
LOSS: $1.00
NET PRICE: $5.20
MR. ED SAID IT BEST....
...."A HEDGE IS A HEDGE IS A HEDGE IS A HEDGE" HOPEFULLY YOU GET THE POINT!
Edited by farmn4$ 7/13/2012 16:38
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dec hedges
