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Looking for help with a Basis contract.
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ma80
Posted 4/20/2018 08:11 (#6720978 - in reply to #6720933)
Subject: RE: Looking for help with a Basis contract.


IA
Buying put options would be probably the simplest thing you can do. If the market goes higher you'll get to price at the market. If market goes lower your put protects you.

Many buyers of grain can do this on a cash grain contract, just ask them about rules and timing on when you need to close positions.


A similar strategy is sell grain and buy a call. If you don't produce the grain and the price goes higher, the call will protect your price. You'll be out something, but not as much as if you just sold your grain.


Do you ever produce zero? The answer may be yes, but if it is not, I would look to develop a comfort level with contracting some amount, feels to me the markets are shifting to where forward contracts are going to be way more valuable than they were from 2008 to 2015.
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