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Veteran Advisor
Shaggy98
Posts: 4,128
Registered: ‎06-19-2011
0

Puts & Calls

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?

Advisor
Faust100F
Posts: 831
Registered: ‎11-09-2010
0

Re: Puts & Calls

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

 

Advisor
giolucas
Posts: 1,124
Registered: ‎06-25-2010
0

Re: Puts & Calls

Shaggy,

 

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.   

Veteran Advisor
Shaggy98
Posts: 4,128
Registered: ‎06-19-2011
0

Re: Puts & Calls

Faust, you either lost me or I misunderstood you.  I haven't sold anything that I didn't own.  I'm confused, what part of my initial post made you think so?

Senior Contributor
Farmerjoe79
Posts: 411
Registered: ‎04-02-2012
0

Re: Puts & Calls

It sounds like Faust got burned by the board of trade. I always trade straight futures it seems to work better then them dam put and call options.
Veteran Contributor
bullrider685114
Posts: 95
Registered: ‎03-14-2011
0

Re: Puts & Calls

Faust you and Ghost get tired of the other site? You didn't bring that NCIA guy with you did you? Bet he is like a bad penny will just show up. Great to have you guys!

Esteemed Advisor
sw363535
Posts: 4,635
Registered: ‎07-18-2011
0

Re: Puts & Calls

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.

sw
Senior Contributor
ShelladyOptions
Posts: 919
Registered: ‎05-03-2010
0

Re: Puts & Calls

312-628-1492/1490 floor phones

312-404-4050 cell phone

scott@shelladycommodities.com

 

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.

Esteemed Advisor
sw363535
Posts: 4,635
Registered: ‎07-18-2011
0

Re: Puts & Calls

There you go shaggy,  a better answer from a better man.  Thanks Scott.

sw
Veteran Advisor
Palouser
Posts: 2,223
Registered: ‎05-13-2010
0

Insurance is a cost of business

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.