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March 2013 Archive for Standard Grain

RSS By: Joe Vaclavik

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.

 

Farmers and PUT Options

Mar 22, 2013

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. 

 

  Standard Grain | (312) 462-4438 | www.standardgrain.com 

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