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S Illinois | The first question to ask is what exactly are you trying to protect? When protecting the fall crop insurance price it’s usually tied to the revenue shortfall cause by lack of bushels or lack of revenue from a growing crop. The protection needed is due to fluctuations that can can still occur due to final price(and payment) not being set until the end of Oct and in turn a change in crop insurance payout depending on that price.
In a PP situation your insurance payment cannot change no matter what the corn market does. This would lead to not really trying to protect anything but rather entering into a speculation trade. Nothing wrong with that but your purely speculating and straight futures give the biggest bang for the buck. Also highest risk.
Calls are ok but they will be costly with the time value component. Out of the money are cheaper obviously but also the most likely to expire worthless. With any option, don’t plan on holding to expiration, but rather pick a time or price to liquidate them.
It really comes down to do you need more income and is this the best way to gain it? Remember if prices go up you have next years crop to sell also.
Edit: spelling
Edited by w1891 6/2/2024 11:49
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Is there a cheap way to protect pp fall insurance price
