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EC SD | My strategy for corn this fall was to deliver it into unusually strong fall basis, defer half the payments to Jan, and buy very cheap March calls.
Reasons:
1) Avoids basis risk - I think basis will be lower in the future than now, if export pace slows
2) Avoids downside risk in CBOT price
3) Avoids interest and other costs of storing physical corn
4) 15 cents for the March ATM calls was cheaper than storing it - yet gives upside potential in a normal seasonal rally
So far the calls are holding even at 15 cents after a month of holding them, but the other benefits are there... | |
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Sell corn into strong basis and buy cheap calls
