The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Joseph Vaclavik is the president at Standard Grain in Chicago. Standard Grain provides futures and options brokerage to farms, feedlots, elevators, processors, end-users and traders. Visit www.standardgrain.com for more information.
A couple of thoughts on PUT options in the grain markets ahead of next week's USDA Planting Intentions report:
A farmer shouldn’t buy PUT options against grain production because they’re bearish; the most bullish farmers are the ones who should buy the options. PUT options are insurance, not a sale. The bearish farmer should make cash sales, the bullish farmer should buy the PUT option insurance and keep his upside open. December corn $5.70 PUT options run about 50 cents this morning and set a floor at $5.20/Dec futures. There is huge risk involved in next week’s report, especially when considering that new crop corn is 30 cents off recent lows.
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