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| If your cash bids for October are higher than December delivery then you should sell the physical corn in October and re-own with a Call Option. Thats the way it is here in Iowa, and i'm sure similar in VA.
If the CASH market is presenting a "carry" from October to Dec, a Put Option would be the wiser choice. (assuming its worth the Cost of Carry). Because the Market is paying you to store your physical commodity until future delivery.
I'm telling clients to sell the Cash corn for October. (25c better bid than Dec), and re-own with a March Call. Currently March Futures are at 4.68. You can buy the March 470 Call for 26c. That gives you a true FLOOR on your cash bushels (which you sold) and you will be penny-for-penny LONG March Futures at $4.94. (470 strike+premium paid).
Let me know if you have any questions.
john
319-653-3520 | |
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Put or call?
