USING PUTS TO GET COMFORTABLE
AUDIO COMMENTARY
Headlines continue to drive us
Trump meeting with China in May
USDA next Tuesday
Will the USDA stocks be higher or lower than the market is expecting?
Stocks tend drive the price movement more than acres do in this USDA report
Usually see acres increase by June
Producers and RVO at White House tomorrow
There are so many possibilities higher or lower
If you can be profitable, why wouldn’t you do something?
How do put options work?
Longer you want insurance, the more it will cost
Selling calls to pay for your downside protection
Being the insurance company vs someone buying insurance
How sold or hedged should you be?
Getting comfortable
Corn strategies below audio*
Listen to today’s audio below
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Office: (806)484-1214
Options Strategies
Texas Hedge goes over a few of these strategies in further detail. Head over to their website if you’d like to see more details.
Old Crop Strategy 1:
Simple Downside Protection
Buy a May ATM put for 10-15 cents.
This expires April 24th. So it covers you through the next two USDA reports.
Old Crop Strategy 2:
Call Premium Pays for Protection
Buy a May ATM put
Sell a $5.30 Dec call
If you are comfortable selling calls, the premium from selling the call would cover the cost of the put.
Old Crop Strategy 3:
30 cents of Protection for No Cost
Buy July $4.70 put
Sell July $4.30 put
Sell July $5.00 call
This would give you 30 cents of downside protection for no cost.
New Crop Strategy 1:
Simple Downside Protection
Buy a June $4.80 put
Based off Dec but expires in May. Offers 57 days of protection for 10 cents or less.
New Crop Strategy 2:
100% Protection for 8 Cents with 60 cents of Upside
Buy Dec $4.80 put (6/26 exp)
Sell Dec $5.50 call (6/26 exp)
Net cost of 8 cents. Gives you a floor of $4.80 and 60 cents of upside participation until June 26th.
New Crop Strategy 3:
Collect Over 30 Cents with a $4.10-$6.10 Breakeven
Sell Dec $4.50 put
Sell Dec $5.70 call
This lets you collect over 30 cents and gives you a breakeven from $4.10 to $6.10 on the trade.
We made an entire post about this single trade last week. Use the hyper link to read the full details on it.
These strategies may not be the right fit for you and offer different risks. Give us a call or a text if you want to talk through them.
Office: (806)484-1214
Want to Talk?
Our phones are open 24/7 for you guys if you ever need anything or want to discuss your operation.
Jeremey, Lauren & Office: (806)484-1214
Sebastian: (605)280-1186
Email: sfrost@dailymarketminute.com
Hedge Account
Interested in a hedge account? Use the link below to set up an account or give us a call.
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