Corn Futures
Purchasing and Risk Management Alternatives

Date: July 29, 2013

 

             Futures Market

   The Long Hedge
                 Ccreating a fixed price by buying Corn futures

  Market   Purchase Historical Expected
Contract Close Month Basis Net Price
Sep $4.89 Aug -$0.11 $4.78
Dec $4.73 Nov -$0.17 $4.56
Mar $4.86 Feb -$0.11 $4.75

 
 

                       Options Market

Corn Option Quotes
Strike Call Sep Put Strike Call Dec Put Strike Call Mar Put
$5.10 $0.05     $4.90 $0.19     $5.10 $0.26    
$5.00 $0.08     $4.80 $0.23     $5.00 $0.29    
$4.90 $0.12     $4.70 $0.28     $4.90 $0.33    
$4.80     $0.08 $4.60     $0.19 $4.80     $0.32
$4.70     $0.05 $4.50     $0.15 $4.70     $0.27

              Buying a Call
                  Creating a maximum price by buying Corn Call Options

  Call Aug Expected   Call Nov Expected   Call Feb Expected
Strike Premium Basis Max Price Strike Premium Basis Max Price Strike Premium Basis Max Price
$5.10 $0.05 -$0.11 $5.04 $4.90 $0.19 -$0.17 $4.92 $5.10 $0.26 -$0.11 $5.25
$5.00 $0.08 -$0.11 $4.97 $4.80 $0.23 -$0.17 $4.86 $5.00 $0.29 -$0.11 $5.18
$4.90 $0.12 -$0.11 $4.91 $4.70 $0.28 -$0.17 $4.81 $4.90 $0.33 -$0.11 $5.12

 

        The Fence
                  Creating a maximum price at a cheaper cost
    by Buying Corn Call Options and Selling Put Options

Call Put Call Put Aug Expected Expected
Strike Strike Premium Premium Basis Max Price Min. Price
$5.00 $4.80 $0.08 $0.08 -$0.11 $4.89 $4.69
$5.10 $4.70 $0.05 $0.05 -$0.11 $4.99 $4.59
             
Call Put Call Put Nov Expected Expected
Strike Strike Premium Premium Basis Max Price Min. Price
$4.80 $4.60 $0.23 $0.19 -$0.17 $4.67 $4.47
$4.90 $4.50 $0.19 $0.15 -$0.17 $4.77 $4.37
             
Call Put Call Put Feb Expected Expected
Strike Strike Premium Premium Basis Max Price Min. Price
$5.00 $4.80 $0.29 $0.32 -$0.11 $4.86 $4.66
$5.10 $4.70 $0.26 $0.27 -$0.11 $4.98 $4.58

 

          

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                 Dillon M Feuz