Time to (hopefully) waste money on soybean puts?

[farming101]

April 26 update compared to Mar 21 close

ZSN19 options

900 puts 14.375 cents, closed Apr 26@ 40 up 25.625 or 278.3%
880 puts 8.5 cents, closed Apr 26@ 25.875 up 17.375 or 304.4%
860 puts 4.75 cents, closed Apr 26@ 14.25 up 9.5 or 300%
840 puts 2.625 cents, closed Apr 26@ 8.375 up 5.75 or 319%

July canola puts

470 puts $7.20/t, closed Apr 26@ 26.10 up 18.90 or 362.5%
465 puts $5.50/t, closed Apr 26@ 21.80 up 16.30 or 396.4%
460 puts $4.20/t, closed Apr 26@ 17.70 up 13.50 or 421.4%

[farming101]

Brought this forward to update current values.

It may be the time has passed to get in on July options

[errolanderson]

Many growers own better quality canola put options.

November $510 puts @ $52/MT
November $500 puts @ $43/MT
November $490 puts @ $34/MT

Many Nov $500 puts were purchased as price protection between $17 to $21/MT. Recommend maintaining positions for price ongoing canola price protection.

Example: Nov $500 put option - $18/MT premium = $482/MT ($10.90/bu) - delivered fall basis = net protection. With put options, you are not tied to a gov't program, no production or delivery obligation.
You are master of your own destiny . . . this is a solid tool for your marketing toolbox.

[bucket]

Obviously the guy from the WCWGA that testified in front of the AG committee that believes in the open market didn't follow that advice....because he said he was out 50000 on his stored canola.....

[TechAnalyst]

With this developing in real time, I would like to highlight another benefit of using options in your risk management strategy for those interested.

Because you can buy or sell the options at any time, you can actually pull some money out of them as the market falls while retaining your protection.

Using Errol's example, the November $500 put options are now $40 in the money. That is, the market is now about $460/t so if you exercised your option to be short at $500, you would have a $40/t profitable position.

Today you could sell the $500 put for $43/t and buy a $470 put for $19/t. You get the $24/t net deposited in your account which more than covers the original cost of the option (insurance). You now have free price insurance protecting you from a market move below $470/t Nov futures.

You could do this as many times as you wish if prices continue to fall in the short run with a hope that long before November the market reverses on a Chinese resolution or production issue somewhere (or whatever it takes).

It would be a bit like being able to get paid 80% of an expected crop insurance claim in the middle of a drought with the potential for the crop to recover by harvest.

Just something to think about...

[poorboy]

For those of us without a broker, is there an online broker in Canada that trades in options on canola, wheat and corn?

[TechAnalyst]

There may be others but RJO'Brien Canada offers online self directed brokerage services. They also offer broker assisted accounts at a reduced rate with you doing most of the trading. I believe the broker is just available to help if needed or place orders for you if you can't get online for some reason.

PI Financial is another firm working actively with Western Canadian producers on a full service basis.

One quick comment, if you are new to the process, you may want to consider working with a broker at least initially. The cost difference isn't significant unless you trade quite actively and they should be able to help you achieve your objectives.

Just keep in mind, if you only want to trade a couple of options per year, a good broker would likely want to help you with strategy but want you to follow the markets on a day to day basis yourself (with the vast amount of information available online).

Hope that helps...

[errolanderson]

For growers wanting longer-term canola price protection to try to take advantage of a seasonally narrower post-harvest basis . . . January canola $460 put options traded at $14/MT today.

January canola options expire around Xmas.

Jan $460 strike price - $14 put premium = $446/MT ($10.11/bu) floor - delivered basis into Nov/Dec.

No delivery or production obligation.

[farming101]

Nov 19 canola support at about 446. It will be tested

[poorboy]

There may be others but RJO'Brien Canada offers online self directed brokerage services. They also offer broker assisted accounts at a reduced rate with you doing most of the trading. I believe the broker is just available to help if needed or place orders for you if you can't get online for some reason.

PI Financial is another firm working actively with Western Canadian producers on a full service basis.

One quick comment, if you are new to the process, you may want to consider working with a broker at least initially. The cost difference isn't significant unless you trade quite actively and they should be able to help you achieve your objectives.

Just keep in mind, if you only want to trade a couple of options per year, a good broker would likely want to help you with strategy but want you to follow the markets on a day to day basis yourself (with the vast amount of information available online).

Hope that helps...

Thank you. Was just hoping for something fast. Most online things you send the money and can have things done immediately. 20 years ago when I had a trading account it took days to get the corportate paperwork done to get the account going.