Just wondering.

[inbredredneck]

The use of futres, options, contracts etc is also not risk free. Things can go wrong very fast on some occasions. Prices rise and you fail to fill your contract for example. Buying in to fill a contract at a now high price has put a few businesses under.

Puts and calls are risk free.

IBRN, unlike the posse, I've seldom seen anything you wrote I don't agree with but I had to question you here. I think you need to brush up on option risk characteristics and how you can get your ass burned real quick like with puts and calls. When selling calls or puts, the potential loss is unlimited.

Please explain I gotta hear this. I have never in my life ever seen any person who sells a put on feeder cattle while owning said feeder cattle. By doing so you are saying I'm so confident that feeder cattle will be higher, I am willing to sell a put and take the chance of losing everything and more for $3.85. cwt. If you are confident enough to sell a put while owning the cattle why do it? Seems like someone might need to go back to marketing 101.

 

[jedstivers]

The use of futres, options, contracts etc is also not risk free. Things can go wrong very fast on some occasions. Prices rise and you fail to fill your contract for example. Buying in to fill a contract at a now high price has put a few businesses under.

Puts and calls are risk free.

IBRN, unlike the posse, I've seldom seen anything you wrote I don't agree with but I had to question you here. I think you need to brush up on option risk characteristics and how you can get your ass burned real quick like with puts and calls. When selling calls or puts, the potential loss is unlimited.

How?

 

[Massey135]

Short puts really have risk limited to their strike price, but are considered unlimited.

 

[inbredredneck]

Short puts really have risk limited to their strike price, but are considered unlimited.

Thats the best you could do? I would never under any circumstance do what you have suggested doing as a marketing tool. You have done nothing to set a price floor to gaurantee profit on your cattle, but ironically what you have done is to assure yourself to go way deeper in the hole if the market falls, because what you now have done, is to gaurantee yourself double the loss. Once on the cattle once on the sale of the option. Crazy marketing plan.

 

[Massey135]

Short puts really have risk limited to their strike price, but are considered unlimited.

Thats the best you could do?

Are you suggesting selling naked puts?

 

[inbredredneck]

Short puts really have risk limited to their strike price, but are considered unlimited.

Thats the best you could do?

Are you suggesting selling naked puts?

You might want to have someone explain to you buying and selling options.

 

[dieselbeef]

wish someone would explain all this to me..cuz i been reading something i have no idea wth yall are talking bout..puts/strike/options....um..i just ahaul em to the market if i cant sell em cut and wrapped....pick up my check

im sure all thats for you guys that sell hudreds or thousands

btw..wonder who owns the most cattle on this board..

gary

 

[highgrit]

DB, I'am lost to but I think alot of it has to do with pushing paper and not beef. Puts, strikes, options are for the big dogs, this little doggie is staying on the porch. I think it cost the little guy's $$. Somebody has to pay for the paper.

 

[Douglas]

Looks to me like the cme price is not a national price at all but a midwest price only.

How did you come to that conclusion?

Our markets in the east certainly follow the cme but our distance to feed lots make local demand for grass cattle, diesel costs, traveling weather, etc. a big factor. There are times when our local cash prices move differently than cme when these other issues are factored in. Otherwise the basis will always be about the same and it is not. Please explain what i am missing as i am pretty new to all this.

 

[backhoeboogie]

Our markets in the east certainly follow the cme but our distance to feed lots make local demand for grass cattle, diesel costs, traveling weather, etc. a big factor. There are times when our local cash prices move differently than cme when these other issues are factored in. Otherwise the basis will always be about the same and it is not. Please explain what i am missing as i am pretty new to all this.

Just a thought, If you can pool your steers with other folks, it MIGHT make a difference. Much of it is going to depend on who is doing the brokering. Pooling works for some folks. Other times animals get graded and you have to keep up with who's steer graded what.

 

[Limomike]

wish someone would explain all this to me..cuz i been reading something i have no idea wth yall are talking bout..puts/strike/options....um..i just ahaul em to the market if i cant sell em cut and wrapped....pick up my check

im sure all thats for you guys that sell hudreds or thousands

btw..wonder who owns the most cattle on this board..

gary

Gary, Im with you on this... raise em and sell em.. pretty basic to me.

 

[Douglas]

Our markets in the east certainly follow the cme but our distance to feed lots make local demand for grass cattle, diesel costs, traveling weather, etc. a big factor. There are times when our local cash prices move differently than cme when these other issues are factored in. Otherwise the basis will always be about the same and it is not. Please explain what i am missing as i am pretty new to all this.

Just a thought, If you can pool your steers with other folks, it MIGHT make a difference. Much of it is going to depend on who is doing the brokering. Pooling works for some folks. Other times animals get graded and you have to keep up with who's steer graded what.

Yea i understand all that, but my point is that historically the markets were i sell are lower in the fall and higher in the spring based on local supply and demand factors. The strategy for my operation is based on that notion and it works most years, well so far every year.

 

[backhoeboogie]

It is pretty much the same here. When it comes to buying heavy breds, Nov and Dec seem to be the best time for me. There is a definate fall cut off time for selling the way I sell at the barn as well.

 

[jedstivers]

wish someone would explain all this to me..cuz i been reading something i have no idea wth yall are talking bout..puts/strike/options....um..i just ahaul em to the market if i cant sell em cut and wrapped....pick up my check

im sure all thats for you guys that sell hudreds or thousands

btw..wonder who owns the most cattle on this board..

gary

Gary, Im with you on this... raise em and sell em.. pretty basic to me.

That works for cow/calf and with #'s under potload size. You go to buying potloads of calves and not buy protection under them you can get your head handed to you.

 

[mwj]

wish someone would explain all this to me..cuz i been reading something i have no idea wth yall are talking bout..puts/strike/options....um..i just ahaul em to the market if i cant sell em cut and wrapped....pick up my check

im sure all thats for you guys that sell hudreds or thousands

btw..wonder who owns the most cattle on this board..

gary

Gary, Im with you on this... raise em and sell em.. pretty basic to me.

That works for cow/calf and with #'s under potload size. You go to buying potloads of calves and not buy protection under them you can get your head handed to you.

Jed you are the voice of reason. I am glad to see that you plan on staying in buisness so there will be a market for all those salebarn calves

 

[dieselbeef]

yeah i realize its potload stuff..thats why im lost in the whole thing