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Hero or goat? Views from a veteran pit trader

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  • Gold, Mark A

Abstract

Options are one of the best marketing tools offered to agricultural producers. A put option allows the customer to protect the downside while maintaining the ability to capture higher prices. When buying put options, the customer is never subject to a margin. As with any insurance policy, you want to recapture the premium. Before customers spend their hard-earned money on another input expense, there had better be a good reason for them to be buying the option. The best reason would be that hem market is going lower, which would justify buying puts, or the market is going higher, which would justify buying calls. It is important to note that he objective is not to predict prices.

Suggested Citation

  • Gold, Mark A, 2003. "Hero or goat? Views from a veteran pit trader," American Bankers Association, American Bankers Association > Journal of Agricultural Lending, vol. 16(3).
    • Handle: RePEc:ags:abajal:336679
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    File URL: https://ageconsearch.umn.edu/record/336679/files/ers2022-23-0637.pdf
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