Sell canola buy calls?

[jamesb]

And where does one trade calls and puts on commodity futures?

For regular options a account with a brokerage. A simple way to do it is option- like product that many of the grain companies have that is essentially an ability to capture a run up in price in the future. In my experience they are real easy to buy but are more expensive than using a standard put or call.

[farming101]

For regular options a account with a brokerage. A simple way to do it is option- like product that many of the grain companies have that is essentially an ability to capture a run up in price in the future. In my experience they are real easy to buy but are more expensive than using a standard put or call.

And of course the actual grain is delivered to same company you made the deal with. Buying an option on the exchange allows you to keep your delivery choices open. (If you haven't priced your grain yet).

Also graincos don't usually offer ways to stay in the market after the grain is gone. They're after the handlings

[errolanderson]

Here's the flip side of the coin . . . .

Store cash canola and purchase put options as price protection.
Advantage of this is; the grower can wait on basis premiums potentially offered later in the crop year.

March canola: $570 put @ $15/MT . . . . $560 put @ $11/MT . . . . $550 put @ $8.50/MT.

May canola: $570 put @ $18/MT . . . . $560 put @ $14/MT . . . . $550 put @ $10/MT

July canola: $570 put @ $24/MT . . . . $560 put @ $19/MT . . . . $550 put @ $15/MT

[errolanderson]

Here's the flip side of the coin . . . .

Store cash canola and purchase put options as price protection.
Advantage of this is; the grower can wait on basis premiums potentially offered later in the crop year.

March canola: $570 put @ $15/MT . . . . $560 put @ $11/MT . . . . $550 put @ $8.50/MT.

May canola: $570 put @ $18/MT . . . . $560 put @ $14/MT . . . . $550 put @ $10/MT

July canola: $570 put @ $24/MT . . . . $560 put @ $19/MT . . . . $550 put @ $15/MT

Note: Trading through a commodity brokerage account allows the grower full control of their marketing. There is no tie to handlings and cash grain contracts. There is no production and/or delivery obligation.

Also, it is cheaper to go direct and use your own commodity trading account.

[canolacrazy]

$13.00 is available. it's a no-brainer. if no need for cash right now, sell 50% now and let the other half ride till spring. if there's bills to pay, go to 75% sold.

[MBgrower]

with 13.00 canola who needs to complicate things with options, just sell the cash.

[Oliver88]

Here's the flip side of the coin . . . .

Store cash canola and purchase put options as price protection.
Advantage of this is; the grower can wait on basis premiums potentially offered later in the crop year.

March canola: $570 put @ $15/MT . . . . $560 put @ $11/MT . . . . $550 put @ $8.50/MT.

May canola: $570 put @ $18/MT . . . . $560 put @ $14/MT . . . . $550 put @ $10/MT

July canola: $570 put @ $24/MT . . . . $560 put @ $19/MT . . . . $550 put @ $15/MT

I could see a put option working well for new crop canola.

[errolanderson]

I could see a put option working well for new crop canola.

Totally agree . . . .

A November canola 2021 $520 put is now trading @ $20/MT. This guarantees $500/MT ($11.35/bu) canola minus your fall '21 delivered basis with no production or delivery obligation.

[farmaholic]

Totally agree . . . .

A November canola 2021 $520 put is now trading @ $20/MT. This guarantees $500/MT ($11.35/bu) canola minus your fall '21 delivered basis with no production or delivery obligation.

A $40/tonne fall vulture basis will really cut into that plan.
Hope to sign a cheaper basis contract before delivery.....but that commits you then.
$10.45 is nothing to write home about.
With the potential for very little carry out.... I would think fall prices wont be much different than the above example.
All hypothetical of course.

Or the put expires worthless and $0.45/bu on how ever many tonnes you were trying to protect just got flushed down the toilet.

"Insurance".....