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MN | Agreed.
Selling "covered calls" or selling calls on "premium offers" would be hedging. If you know what you're doing, selling calls can add value to your sales.
Buying puts, is also hedging. Generally, I would characterize it as an expensive form of insurance, but they have their place.
Buying "courage calls" or "minimum price contracts" , I don't have much use for and would have a hard time recommending. Most farmers who buy them hold them until they expire worthless. Think about the farmer, he or she is perpetually long a crop; either in the bin, in the field, future crops. Not to me anyways, good strategy to get LONGER corn or soybeans via an option. A "texas hedge" is like buying a lotto ticket, but atleast with a call your max risk is the cost of the premium. | |
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What exactly is a put and call?
