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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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