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09-14-2017 09:10 PM
I never bought an option in my life, so I have no idea what I`m talking about. I just have this gut feeling that next summer weather, war, economic conditions, something will cause corn to rally, I won`t be able to physically hold corn until then, I am just wondering if possibly buying a slightly out of the money call on dec 18 corn in the month of july would be a possible scenario to plan for? Obviously if the crop goes in the ground timely, no problems and is chest high by the 4th July, plans change.
Like if you put aside about 15 cents to gamble, if conditions are right, that could extend ownership into a month with some fireworks and worst case scenario, you`re out 15 cents. I`m sure I`m not the first rube to think of this, but I thought I`d run it past the market gurus on here.
Also, does anyone have a recommendation of a concise book on the ins and outs of trading options? I`ve got 6-8 months to learn all about this "delta" stuff. Thanks for the input.
09-15-2017 05:44 AM
1. Don't buy a slightly out of the money option, buy one that is 30 cents in the money. We are using the CZ18 360 call
2. Buy them now. If you can see the writing on the wall, so can everyone else, or will long before July. The lows will either be now or in late October in corn, so if you are using a CZ18 call it won't matter.
3. Buy 1/4 of your position once a week for 4 weeks. We did the first ones on FND 9/1 for better or worse.
Oh, lastly, remember with this position in place, you can sell some on the way up at $4.50, sell the call for a 50 cent profit and get $5 corn. It might be just that easy.
09-15-2017 07:11 AM
Thanks Time, I`ve kind of heard that too, that cheap options are "worthless", however a BTO talks about utilizing 2 cent options, but I know just enough that I don`t understand what he`s talking about. And I`ve heard about "buying a call and paying for it selling a put" ...whoa that`s the Black Diamond slope!
There`s a guy Michael Smith with a book on Amazon "No Nonsense Options Trading" I`m thinking of getting. But you see I don`t even know that a July option for Dec 18 corn could be bought this far in advance, that`s how out of the loop I am
09-15-2017 09:02 AM
No need to spend money on a book, when the CME will educate you for free in the expectation of collecting commissions from you. If you go to cmegroup.com, on the top right is an education link. After clicking on that, click on course catalog, put agriculture in the search window, and start learning! Their material is pretty good.