Question for Charlie and others. Should I be buying Spring Price Endorsement, or Put options?
SPE strike price is $11/bushel, or 485/tonne, doesn`t kick in until 9.90/bushel, or 436.5/tonne.
Cost is roughly $14.70/tonne, if I take 60% coverage.
Buying a $500 Put on the WCE would cost around 11.30/tonne plus commission.
The SPE is worthless unless the Nov futures drops below around that 460 level = 436.5 basis, (What is the exact basis that they use???)
On the other hand, a $500 Put would be worth quite a bit as it approaches the strike price. It looks to me like the Put is the more flexible, valuable, and the more cost effective option?
I looked at Bean Oil Puts too, but they look like they are more expensive for an equivalent level of coverage?
Or am I missing something?
SPE strike price is $11/bushel, or 485/tonne, doesn`t kick in until 9.90/bushel, or 436.5/tonne.
Cost is roughly $14.70/tonne, if I take 60% coverage.
Buying a $500 Put on the WCE would cost around 11.30/tonne plus commission.
The SPE is worthless unless the Nov futures drops below around that 460 level = 436.5 basis, (What is the exact basis that they use???)
On the other hand, a $500 Put would be worth quite a bit as it approaches the strike price. It looks to me like the Put is the more flexible, valuable, and the more cost effective option?
I looked at Bean Oil Puts too, but they look like they are more expensive for an equivalent level of coverage?
Or am I missing something?
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