Pre Harvest
- Allows lock in of worst case scenario while participating in higher markets should they occur
- Allows approximate worst case buyout in case of crop failure
- Fee based on Option Cost (Premium) and Option Fee
- 5,000 bu Minimum
Example: Minimum Price as Price INSURANCE
-
- You own a $5.00 KC July Wheat Call Option
- $5.00 is your BASE price
- IF Futures go to $7.00, your option is "in the money $2.00, and you can get out of your option, adding $2.00 to your price. Becomes regular Purchase contract.
- IF Futures go to $4.00, your option is "out of the money $1.00, but you do not take $1.00 of of your minimum price.
- You own a $5.00 KC July Wheat Call Option
Post Harvest
- All features on Pre-Harvest except
- No buyout needed because bushels are known
- Ownership costs stop. No storage and you get your minimum price paid up front.
- If prices get better and you re-price, you are paid the difference.