How would you figure buying calls to 'cover sales' on a break? Just curious.
It is true that I don't make it a practice because I see covering 'risk' as a cost that detracts from my selling price. Otherwise I would wait for the higher price I expect - which is always a risk element, and I feel I can accept the risk w/o insurance. I'm not criticizing, I'm just wondering about how you'd set it up.
are you as confused as I am about why Palousers entry is highlighted ???
does this mean someone actually wants knowledge they don't have or ????
sorry, just perplexed - if someone could explain. Is there a disconnect on the producer side about how a strategy makes a business $$$ -- just plain see it as unnecessary, think basis contracts would work better - honest - I really am not sure here.
so let me give her a whirl, Cat--you paper sold some Novie, which is called locking in a price (on some bushels-not all of your anticipated prod) in the event prices are lower when it's time to sell physical come autumn- yes?
then all yer saying is if there is a big enough pullback -- you will own (add) some old paper to INCREASE your net-net-net length- paper + physical --- is it that simple?
Some guys will buy deep in the money puts say like now on this run and wait until delivery to price the physical however I feel that gets to be a little pricey if youre wrong.
that is what I thought.
so Palouser is just saying he prefers to not play the swings as much - or that there could be added cost to the operation's bottom line -- unforseen, perhaps - by doing the extra trading you are talkin' 'bout?
edit: or that he's confident enough about prices being higher and/or has enough expenses covered ahead both from the longer term,
that this is more of a micro-strategy that's for some -- not all?