Minni Wheat hedge

[rain]

Charlie can you see any value in doing some kind of December Minni Wheat option hedge?

Some kind of buy put sell call.

[TOM4CWB]

Rain;

I did this in 1996... have a really good backup plan for financing the margins on the Call option... if the wheat market rallies...

If any volume is done... a $50,000 margin call is a reality in short order...

Also, it may be a little late (or too early to catch the spring rally)... the prices offered today are not much different than last year at this time...

THe ability to ride this position through many months... and not get margined out... is absolutely critical to make this a sucessful risk management plan.

[rain]

What did you do Tom?

[TOM4CWB]

Rain;

We bought wheat puts, out of the money a little ($.15/bu under the futures), and then sold calls $.25/bu out of the money above the futures to pay for the put options...

This is what you said you were wondering about doing... of course as the futures rise so the calls are in the money, the margin calls must be covered...