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12-17-2012 05:41 PM
I bought put options to set a floor under the 2013 bushels & call options to reclaim 2012 already sold bushels. I figured I would lose my a$$ on the short positions but reclaim lost revenue on the long positions. As it is turning out, it is completely the opposite. What the hell is happening?
12-17-2012 06:15 PM
You made a bad bet! Education is expensive sometimes. You just got hosed! Your best option is not to play in the big Casino or think you can beat a crooked house, that front runs your bets, and uses flash trading. You have been "Corzined". Never, Never, Never play in a game where there are no rules. I know people who have lost farms gambling on the CBOT. You might want to practice a tried and true method of marketing. Never, Never, Never sell anything you do not already own. If you do, you are speculating not hedging. Pass the popcorn and get me another Corona. John
12-17-2012 07:33 PM
Sorry to hear that. I trade and do not do any options, just my preference. Early on I got into it but for some reason I did not like it. I always felt like I was paying upfront initially just to get hosed in the end. Literally. So I have stuck with out right positioning.
12-18-2012 07:45 AM
I might cushon it a little, but otherwise I agree with the faust. Options just seemed to guarantee a loss most of the time.
They limit your loss per bushel, but they entice you to risk more bushels. And they create another level of uncertainty pricing the differential, Like trying to drive a truck that stears on both ends. I hit the targets that aren't moving better.
12-18-2012 08:06 AM
312-628-1492/1490 floor phones
312-404-4050 cell phone
I have been trading options for over 24 years. I have traded them in Japan, Europe and the U.S. As a service to you all out there I can answer any of your questions if you call or email the above, preferably email.
Over the years I have seen a lot of stuff but I can assure you that the game is not rigged. It's just so much more difficult to gain an edge or capitalize on opportunity. It's the new normal. Even the professionals I work with would say the same.
Corzine should be in jail. He was a bad example and an even worse man.
So, shoot me an email or give me a call if it's an emergency but I am sure I can help.
12-18-2012 12:09 PM
Options are insurance and the relative cost of the options reflects the value of the policies bought. One shouldn't buy options as a revenue enhancer. Options are for limiting risk that a producer can't tolerate. As soon as one pays for an option the price of the bushels protected have effectively gone down by the same amount. The market goes up or down and you're only insuring an incremental movement one direction, after a given increment (+ your outlay). Kind of like a deductible in a way - unless you bought in the money.
Insurance is 'rigged' in the sense that the seller of it has determined that the frequency and amount of loss in the aggregate of policies issued will not be more than the money received as premiums for those policies. Insurance is sold to make money. So are options. If the price of an option is high because of volatility then it reflects the POV the price of covering that position is riskier and the premium must be higher to cover that risk AND make a profit.
When I buy insurance I kiss that money goodbye in exchange for knowing that if something bad happens I can tolerate the risk beyond what I've determined is a reasonable deductible. I don't buy any more insurance than absolute necessary for me to carry on simply because insurance is a cost and reduces my profit.
If you know enough about the market to think you can make money buying options (or not lose money buying options) then you don't need to buy options in the first place.