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NE CO | I agree that options usually don't work if you are buying them as they expire worthless unless , as you point out, the market is making a big move as it is doing now. In retrospect, I should have purchased some out of the money call options when I made my initial sales. This was the year it would have worked: their increased value as the market moved up would have made most of my margin calls.
With respect to your comment that selling calls could leave me open to more margin calls, you are absolutely correct. And that is part of my hesitancy in executing the strategy until I am convinced this market is done going up (and of course, who knows when that will occur!). Since it would be a covered call (I have wheat in the bin to cover the option), the increased value of the wheat in the bin would offset the margin calls, just as selling the futures in a hedging strategy. Psychologically though, it pains me to be writing margin calls. If I had just sold the cash wheat at the lower price, it is easier to forget about the past sale look forward. | |
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House of Cards?
