IDEAS home Printed from https://ideas.repec.org/a/ags/jasfmr/118951.html
   My bibliography  Save this article

Using Options: The Role of Declining Time Value

Author

Listed:
  • King, Katie
  • Zulauf, Carl R.

Abstract

Farmers and other buyers and sellers of commodities use options in their marketing strategies. A cost of buying put and call options is the decay in option premium that occurs from the time an option position is established until the time the option position is closed out. This article finds that the average option premium decay cost associated with buying December corn and November soybean put and call options is relatively small if the option position is closed out before mid-to-late June. After this date the average option premium decay cost begins to accelerate, resulting in and increasing cost of using options to market corn and soybeans.

Suggested Citation

  • King, Katie & Zulauf, Carl R., 2011. "Using Options: The Role of Declining Time Value," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2011, pages 1-5, June.
    • Handle: RePEc:ags:jasfmr:118951
    DOI: 10.22004/ag.econ.118951
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/118951/files/345_Zulauf.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.118951?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:jasfmr:118951. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/asfmrea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.