Wade Assurance
  • Home
  • Speculation
  • The Pit
  • Resources
    • Futures Contract Specs
    • Tools
    • Terminology
    • 2020 Trade Performance
    • About
  • Disclaimer
  • Subscribe

Selling Wheat Puts

12/7/2016

0 Comments

 
I do not make wheat recommendations often, but wheat prices have not been at this level since 2006.  That said, I believe wheat has found a bottom, at least for a few months.  I don't know how much higher wheat can go, but I see wheat doing no worse than moving sideways.  If you are a wheat grower, and you are buying protection here with options, you are probably wasting your money.  In a sideways to higher trending market, a better strategy would be selling wheat puts.
Picture
Had you used this strategy to sell December wheat puts the last time we had this set up in early September, you could have collected around 35 cents.  Because they would have expired last month, you would have kept all the premium.  I think we face a similar scenario today.  March wheat puts are 35 cents a bushel. 
Picture
Fundamentals do not favor corn this year.  Entering the 2017 marketing year, I have yet to make a corn sell recommendation.  Getting above average prices may be challenging.  I am recommending selling $4.30 March wheat puts here against 100% of your corn marketings that you expect to grow and collecting .35 per bushel.  This is a fairly low risk strategy which can add revenue to this years marketings. ​

The worst case scenario would be if wheat drops below $3.95 at expiration.  At that point, you would be on the hook penny for penny below $3.95, so the strategy is not without risk.  I do believe however that wheat is at an actionable point here, and will benefit from a weaker dollar as well as the usual seasonal strength in the market durring the crop insurance price discovery period.
0 Comments



Leave a Reply.

    Archives

    January 2019
    December 2018
    June 2018
    March 2018
    February 2018
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    December 2015
    November 2015
    November 2014
    July 2014
    November 2013
    October 2013
    September 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012

    Categories

    All
    Brokerage
    Carryout Worksheet
    Corn
    Crop Insurance
    Cycles
    Dollar
    Oil
    Soybeans
    Wheat

    RSS Feed

    Corn Cycles

    Terminology

    Track Record

Steve Wade and Tyler Wade of Wade Assurance are associated persons for AgDairy LLC.

                           Commodity Risk Disclosure Statement

The risk of loss in trading commodity futures contracts can be substantial.  You should, therefore, carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

Wade Assurance is an equal opportunity insurance provider.
CONTACT US
Steve Wade
swade@wadeassurance.com
​
Tyler Wade
​twade@wadeassurance.com
Picture
270-234-6074
  • Home
  • Speculation
  • The Pit
  • Resources
    • Futures Contract Specs
    • Tools
    • Terminology
    • 2020 Trade Performance
    • About
  • Disclaimer
  • Subscribe