The benefits of selling options explained

first_imgShare Facebook Twitter Google + LinkedIn Pinterest Last week’s USDA report showed an increase of just over one bushel per acre in the average yield to 176.6 bushels per acre. Despite a slight decrease in the harvested acres in the report, there will likely need to be a supply disruption sometime in the next eight months for a significant rally to happen. It will probably need to be either a weather issue in Brazil over the next three months or in the U.S. this summer. Even a two million acre decrease in planted corn acres won’t likely be enough to get nearby corn back above $4 at this point. It will take five bushels below trend line yields too.There is considerable fear that corn could slide down further over the next few months. While I think corn could test $3.30, I doubt farmers will sell that low which might help keep prices from staying at those values for long. Therefore, I’m looking for corn to be range bound between $3.45 to $3.55 until the end of March.Bean yields, on the other hand, were reduced slightly. The market was expecting a slight increase, so there was some fund buying late Friday. Fundamentally there is little reason for bean prices to go up. The USDA report also showed a decrease in export demand, global supply is high and Brazil is on track to produce a record crop. It seems a small production issue is necessary for a bean rally as well.However, there was a similar situation two years ago when everyone thought $8 was likely at this point in the year, but then South America had logistical issues getting the beans out of the fields, causing an unexpected rally. I expect some traders will remember this and will hold on, waiting to see harvest progress in the next 45 to 60 days. The benefits of selling options explainedI hear analysts frequently talk about how selling options is risky. They’ll often say things that scare farmers out of considering alternative solutions with misleading and sometimes outlandish claims that provide little detail, education or explanation. What many farmers don’t understand is that these analysts are often looking at these trades as a speculator. And as a speculator, yes, selling options could be risky and may not be advisable.Farmers have very different goals and objectives than speculators though, and often some analysts don’t take that into consideration. The key difference, and to me it’s a big one, farmers ALWAYS have more grain to sell. Speculators don’t. This key difference makes advice from analysts/speculators to farmers somewhat misguided. That’s why I advise farmers to think about what their goal is and look for trades that help achieve those goals.During this sideways market the past year, I’ve had some success with selling corn options that have allowed me to pick up some additional premium as prices stay at unprofitable levels. One of my strategies on some of my production has been to sell straddles. This involves selling both a put and a call at the same price and at the same time. Following provides trade detail and rationale for a previous trade that just expired. It also shows why considering selling options may be a reasonable choice for farmers. Options – Straddle – CornBack on 10/24/17, when March corn was $3.60, I made the following trade on 10% of my ’17 production.Sold — January $3.60 straddle, where I sold both the $3.60 put and $3.60 call and collected a 15-cent premiumTrade Expiration — 12/22/17Potential benefit: If March futures close at $3.60 on 12/22/17, I keep all of the 15-cent premium.Potential concern: Reduced or no premium if the market moves significantly in either direction.On every trade, I know, and am willing to accept every possible outcome: every penny lower than $3.60 I get less premium until $3.45, at $3.45 or lower and I will be losing money on this trade penny for penny and for every penny higher than $3.60 I get less premium until $3.75. At $3.75 or higher I have to make a corn sale at $3.60 against March futures, but I still get to keep the 15 cents so it’s like selling $3.75.When doing straddles I am most profitable if the market is at the strike price at expiration. The further from the strike price, essentially the more money I lose on this trade. That kind of trade may sound very scary to a speculator. But, I’m not a speculator, I’m a farmer with very different goals.Obviously this trade is most profitable if the market stays sideways, because I’ll pocket the money and add it to a previous trade I have made. Considering how the market has been trending this past year, this seems like a likely outcome. If the market rallies, you’ll miss outI don’t think I will “miss out”, because if the market rallies, I think that would be great. This particular trade only represents 10% of my ’17 production. If the market goes to $4 (for instance), yes I’ll have to sell this 10% for $3.75 but then I could start to sell any remaining ’17 production I have unpriced and maybe even some of my ’18 production. I didn’t think this was likely given current market conditions, but I was and I’m still hoping like everyone else that it will happen.This is an example of a difference between speculators and farmers. Farmers always have more to sell, so we are ALWAYS hoping for a rally, no matter what. That’s not always the case for speculators What if the market goes down?The biggest risk in this trade was if corn fell below $3.45 at the end of December. The reason is because I would have either had to take a loss on the trade or it could mean re-ownership of grain, which is usually the last thing I need as a grain producer. Generally I never do straddles unless I already have previously sold grain. This is what limits my downside risk. If the prices fall I can let the straddle trade get exercised and remove a previous sale and take any profits on the difference between what I sold on a previous futures sale and where the straddle makes me re-own grain. This is something I always have to be prepared for even if I think it’s unlikely. What happened?Corn traded to about $3.5225 on 12/22/17 and I was able to buy back just the put portion of this trade for 7.75 cents and I let the call portion of the trade expire worthless. In other words, I made 7 cents net profit on this trade. While that doesn’t seem like tons of money, it goes into my “pot of premium” that I’ve been collecting each month on trades like these. Eventually, I’ll sell the remainder of my ’17 production and I can include these additional premiums to my bottom line. New Trade – Options – Straddle – CornAfter the success of the trade above and expecting the sideways market to continue, on 12/27/17 when May corn was $3.62, I did another straddle on 10% of my ’17 production.Sold — April $3.55 straddle, where I sold both the $3.55 put and $3.55 call and collect an 18-cent premiumTrade Expiration: 3/23/18Potential benefit: If May futures close at $3.55 on 3/23/18, I keep all of the 18-cent premium.Potential concern: Reduced or no premium if the market moves significantly in either direction.On every trade, I know, and am willing to accept every possible outcome: every penny lower than $3.55 I get less premium until $3.37; at $3.37 or lower and I will be losing money on this trade penny for penny; for every penny higher than $3.55 I get less premium until $3.73; at $3.73 or higher I have to make a corn sale at $3.55 against March futures, but I still get to keep the 18 cents so it’s like selling $3.73.Similar to the trade above, I’m most profitable on this trade if the market stays sideways through March. If this happens, I’ll take the additional premium and add to my “pot of premium.” If the market rallies, I’ll have to sell some of my unpriced grain at higher levels than we are today.The biggest risk is if corn falls below $3.37 on 3/23/18. While not ideal, I can buy the straddle back for a loss or remove a previous sale and take profits on the difference between what I sold previously and $3.37 against the May futures. I would likely only remove a previous sale if I felt there was a likely chance of a future market rally. However, that decision would have to be made at a later date when I have more market information.As always the market can go three different directions, up, down and sideways. I understand all possible outcomes of those three scenarios on each trade I make. Up is always great. Even if the trade isn’t most profitable with a rally, I always have more corn to sell, so while I take that into consideration, it really doesn’t matter because I’m happy either way.Selling options and straddles, like the examples above, can be profitable in a sideways market. By including these types of trades in my grain marketing strategy, not only am I profitable during rallies, but I can build premium during sideways markets too. This means that I can be successful in two different market scenarios — rallies and sideways markets, or 2 out of 3 possible outcomes.Market drops are inevitable and need to be considered too. After all, they happen 1 out of 3 times. Generally I try to limit my downside risk by understanding the potential loss of each trade. By putting protections in place and maintaining flexibility when considering all trade opportunities available to me I’m able to reduce some risk.Opening up a marketing strategy to include selling options doesn’t have to be scary. It actually can provide more flexibility and profitability if done correctly. When taking advice it’s always important to make sure goals align before making any decisions. I always ask myself what will happen if the market moves 50 cents or even $1 per bushel in EITHER direction. After all, the bottom line is to make sure my farm operation remains profitable year after year. Jon grew up raising corn and soybeans on a farm near Beatrice, NE. Upon graduation from The University of Nebraska in Lincoln, he became a grain merchandiser and has been trading corn, soybeans and other grains for the last 18 years, building relationships with end-users in the process. After successfully marketing his father’s grain and getting his MBA, 10 years ago he started helping farmer clients market their grain based upon his principals of farmer education, reducing risk, understanding storage potential and using basis strategy to maximize individual farm operation profits. A big believer in farmer education of futures trading, Jon writes a weekly commentary to farmers interested in learning more and growing their farm operations.Trading of futures, options, swaps and other derivatives is risky and is not suitable for all persons. All of these investment products are leveraged, and you can lose more than your initial deposit. Each investment product is offered only to and from jurisdictions where solicitation and sale are lawful, and in accordance with applicable laws and regulations in such jurisdiction. The information provided here should not be relied upon as a substitute for independent research before making your investment decisions. Superior Feed Ingredients, LLC is merely providing this information for your general information and the information does not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision. The contents of this communication and any attachments are for informational purposes only and under no circumstances should they be construed as an offer to buy or sell, or a solicitation to buy or sell any future, option, swap or other derivative. The sources for the information and any opinions in this communication are believed to be reliable, but Superior Feed Ingredients, LLC does not warrant or guarantee the accuracy of such information or opinions. Superior Feed Ingredients, LLC and its principals and employees may take positions different from any positions described in this communication. Past results are not necessarily indicative of future results. He can be contacted at [email protected]last_img read more

Ohio Ag Weather and Forecast — July 20, 2018

first_imgShare Facebook Twitter Google + LinkedIn Pinterest Rain moves into Ohio today. Once it shows up, it will hang around for a while. We can see several different chances for thunderstorms as the day wears on, mostly in western and southwestern parts of the state, but we are not going to try and peg those starting times. The day will feature of mix of showers, thunderstorms and breaks in the precipitation. We will see additional wrap around action holding over the state tomorrow and Sunday, even lingering into Monday morning, nearly doubling our precipitation potential. All told, from this morning through Sunday night, we can see half to 2.5” of rain over 95% of the state. This will be a nice drink, as we have seen most of the state well behind normal on precipitation to date this month. The map at right shows updated precipitation potential through Monday midday.  We are dry next week. We may have to keep an eye out for a few pop-up thunderstorms over about 30% of the state next Thursday night into Friday, but those look so isolated, that we think the threat is minor and may actually go away. Temps next week will bounce back to near normal, after being below normal this weekend.  The extended period still shows some potential for an active pattern. A front sweeping in from ten northwest late the 28th into the 29th could bring up to half an inch of rain, and there is another minor front for the 31st into the 1st that can bring .25”-.5”. But the rest of the extended window in early August is dry. We are not as hot in the period as some competing forecast houseslast_img read more

Utah’s Attorney General Tweets a Death

first_imgYesterday, Utah’s Attorney General, Mark Shurtleff, used his Twitter account, to notify the world that he had OK-ed the execution of a prisoner. “I just gave the go ahead to Corrections Director to proceed with Gardner’s execution. May God grant him the mercy he denied his victims.”The Tweet elicited some shock and moral outrage. Any shock I initially felt was, I think, more due to this announcement being made via a medium better known for less life-altering announcements, like personal lunch menus and the unboxing of electronics.The issue here is less one of the capital punishment’s morality – Twitter is not responsible for the decisions made by representatives of the state of Utah – and more the way this public servant chose to use the service. The tone of Attorney General Shutleff’s subsequent Tweets seem strident and unprofessional. All other things being equal, that is any Twitter user’s right. But not if you are representing your government, your state and its people. Then, it strikes a terribly discordant note, as the Tweets below mightillustrate. A Comprehensive Guide to a Content Audit Facebook is Becoming Less Personal and More Pro… curt hopkins Tags:#Government#Op-Ed#twitter#web center_img The Dos and Don’ts of Brand Awareness Videos Related Posts The first Tweet comes off flippant and the second angry. Neither is appropriate when juxtaposed with the murder of one man – a police officer – and the execution of another. If I were Governor and this man were my AG, the very least I’d do would be to take away a Twitter account he clearly is not responsible enough to use. Guide to Performing Bulk Email Verificationlast_img read more

Mehbooba discusses Art. 35(A) with Rajnath

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UAAP: UP can field in Ricafort, but face risks if TRO ‘invalid’

first_imgTristan Tamayo/INQUIRER.netWhile Rob Ricafort can finally play for University of the Philippines after securing a temporary restraining order, the Maroons face the risk of forfeiture.Commissioner Atty. Rebo Saguisag said the league will abide by the court ruling and won’t stop the wingman from playing if UP decides to field him.ADVERTISEMENT Don’t miss out on the latest news and information. Ricafort will turn 25 on January 2018, after the basketball season is over.  Goran Dragic back with Heat after summer title for Slovenia Brace for potentially devastating typhoon approaching PH – NDRRMC LOOK: Loisa Andalio, Ronnie Alonte unwind in Amanpulo for 3rd anniversary LATEST STORIES MOST READ But with TRO set to lapse on October 21, Ricafort’s fate this Season 80 is not yet set in stone.“Should the TRO be invalid and void, there will be a possibility that the games [Ricafort played in] will be forfeited,” said Saguisag in a press conference Saturday.FEATURED STORIESSPORTSWATCH: Drones light up sky in final leg of SEA Games torch runSPORTSSEA Games: Philippines picks up 1st win in men’s water poloSPORTSMalditas save PH from shutout“As the commissioner, I will not restrain him from playing. But they assume the risk depending on how the court will decide. After 20 days, we don’t know what will happen. It’s the team’s option.”The UAAP eligibility committee initially ruled Ricafort ineligible to play this season as he will exceed the maximum age limit of 25. Nonong Araneta re-elected as PFF presidentcenter_img Read Next Fire hits houses in Mandaluyong City Frontrow holds fun run to raise funds for young cancer patients  E.T. returns to earth, reunites with grown-up Elliott in new ad  Kammuri turning to super typhoon less likely but possible — Pagasa Protesters burn down Iran consulate in Najaf PLAY LIST 01:37Protesters burn down Iran consulate in Najaf01:47Panelo casts doubts on Robredo’s drug war ‘discoveries’01:29Police teams find crossbows, bows in HK university01:35Panelo suggests discounted SEA Games tickets for students02:49Robredo: True leaders perform well despite having ‘uninspiring’ boss02:42PH underwater hockey team aims to make waves in SEA Games BSP sees higher prices in November, but expects stronger peso, low rice costs to put up fight View commentslast_img read more

NEW APPOINTMENTS FOR ATA

first_imgNo one can deny the fact that New Zealand have been catching up to Australia in the Touch standings and the Australian Touch Association (ATA) is certainly not about to let themselves be overtaken. The ATA and the Board of Directors has identified the need to improve not only the elite areas in Australian Touch but also the development at grass roots level. After the ATA Board of Directors meeting was held last weekend, the ATA are pleased to announce Louis Tompkins has been given charge of the men and women in white and diamonds (the referees), while Cathy Gray has been re-affirmed as the High Performance Programes Director. Gray, currently the ATA Director of Elite Programs, will continue in her role with the passion and commitment she has already demonstrated for so many years. Lou has been a member of the Federation of International Touch referees panel for the past 9 years, a member of the National Referees Panel for the last 11 years and if that’s not enough…a member of the NSW Referees Panel for 17 years! His experience and knowledge will benefit Australia’s top referees as well as encourage the growth and development of our up and coming referees. Not only is Lou qualified as a referee, referee presenter, referee coach and Touch coach, he has playing experience and administrator within NSW and has been heavily involved with the Penrith Rugby League affiliate in the past. Lou and the ATA will soon be calling for Nominations for the National Referee Panel in four portfolio areas; Education and Training, Communication, Coaching and Assessment and Affiliate/Youth referee development. All four of these portfolios are crucial to the development of refereeing in Australia. For Cathy, the work load is certain to get no lighter. Australian Touch is already setting it’s sight on retaining the World Cup in South Africa in 2007 and then winning back the Youth World Cup in 2009. Cathy will play a vital role as the High Performance Programs Director and will no doubt have a heavy load of pressure on her shoulders as the World Cup approaches. At the end of those long days of work she may be wishing she wasn’t spending her holidays away from those delightful Year 7-12 students she teaches at school! By Rachel Moyle, [email protected]last_img read more

10 months ago​Gabbiadini put up for sale by Southampton

first_imgTagsTransfersAbout the authorAnsser SadiqShare the loveHave your say ​Gabbiadini put up for sale by Southamptonby Ansser Sadiq10 months agoSend to a friendShare the loveSouthampton want to sell Manolo Gabbiadini this winter.The Italian striker does not fit into Ralph Hasenhuttl’s plans.And Sky Sports reports the Saints want to see a deal done this winter.AC Milan are one of the clubs interested in acquiring his signature.The striker’s agent flew into London for talks with Southampton about his client’s future.Sky Italia suggest that Fiorentina and Bologna also have an interest in the attacker, who has a solitary Premier League goal this season. last_img read more

9 months agoLazio step closer to signing Chelsea defender Zappacosta

first_imgTagsTransfersAbout the authorPaul VegasShare the loveHave your say Lazio step closer to signing Chelsea defender Zappacostaby Paul Vegas9 months agoSend to a friendShare the loveLazio are a step closer to signing Chelsea defender Davide Zappacosta this week.Il Messaggero says Lazio have agreed personal terms with the Italy fullback, who is eager to return home this month.And the outline of a transfer has also been settled, with Lazio and Chelsea agreeing to a six month loan with the option of a permanent deal in June.However, Chelsea’s €15m price is regarded as too rich by Lazio.And Lazio sports chief Igli Tare will spend this week attempting to talk down the valuation. last_img read more

a month agoLyon playmaker Houssem Aouar back on Man City agenda

first_imgLyon playmaker Houssem Aouar back on Man City agendaby Paul Vegasa month agoSend to a friendShare the loveLyon playmaker Houssem Aouar is back on the agenda of Manchester City.Aouar has emerged as one of the most exciting prospects in football at Lyon.L’Equipe say City showed interest in Aouar once again in the summer window just gone.However, both the player and Lyon decided against a move away but Aouar has since struggled to find his best form during the new Ligue 1 campaign.It is reported that he is one of the players ‘shaken’ by Bruno Genesio’s departure as manager and the recent arrival of Sylvinho. TagsTransfersAbout the authorPaul VegasShare the loveHave your saylast_img read more

Kylie Minogue To Headline Butterfly Ball

first_imgOrganisers of one of the UK’s most prestigious charity balls have announced that global pop superstar, Kylie Minogue, will be headlining the event in London on May 15th.Kylie Minogue To Headline Butterfly BallThe multi award-winning artist will perform an exclusive set for guests attending the Caudwell Children Butterfly Ball at Grosvenor House Hotel, Park Lane.The annual event regularly raises in excess of £1.7million to provide life-changing practical and emotional support for disabled children through the charity, Caudwell Children.“I’m delighted to be a part of this fantastic event which does so much to help disabled children in the UK.” said Kylie.With a musical career spanning over three decades and worldwide record sales of over 70million, Kylie’s success includes seven UK Number No.1 singles and four UK No.1 albums, making her one of the UK’s bestselling female artists of all time.Kylie Minogue – Kiss Me OnceOn the back of the release of her critically acclaimed new album, ‘Kiss Me Once’ (released March 17), Kylie promises guests of the star-studded event a glamorous stage show featuring performances of hit songs including new single ‘Into The Blue’ and the worldwide smash, ’Can’t Get You Out of My Head’.The Butterfly Ball is renowned for attracting some of the UK’s most influential business leaders and celebrities as well as Royalty and Government Ministers.Kylie is the latest superstar to perform at the high profile event, which raises funds to provide vital support for disabled children living in the UK. Founded by successful entrepreneur and philanthropist, John Caudwell, the charity has provided services worth over £28million and helped change the lives of thousands of children across the UK.Chief Executive, Trudi Beswick, said: “The Butterfly Ball is such an important event for us, not just because it raises such a lot of money but because it helps to spread awareness of the work we are doing with thousands of families in communities around the UK.We are thrilled to have Kylie performing at the event this year; she has had a glittering career during which she has also done some amazing work for charity. She’s an inspiration to millions and we are really excited to work with her.”The Butterfly Ball takes place in The Great Room at Grosvenor House Hotel, Park Lane, London on Thursday 15th May 2014.The Charity’s ambassadors include Hollywood actress and author, Joan Collins, actress Elizabeth Hurley, Rod Stewart and Penny Lancaster, Peter Andre, Bruce Forsyth and singer, Robbie Williams. The late Boyzone singer, Stephen Gately, was also a Goodwill Ambassador for the Charity.For more information about the Butterfly Ball and Caudwell Children, visit their website at www.caudwellchildren.com or call 01782 600112.last_img read more