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<blockquote data-quote="Craig-TX" data-source="post: 59229" data-attributes="member: 39"><p>Please clarify a few points. </p><p></p><p> </p><p></p><p>It sounds like you are saying a rancher can/should write covered calls against the calves in his pasture? Not against a futures contract, but against his own stock on his own place? Bear in mind that we're talking about cow calf operations, not backgrounding operations.</p><p></p><p></p><p></p><p>Assuming he could, if a rancher sold a covered call for X price and the price dropped below X during the term of the option, why would the rancher want to buy back the call? </p><p></p><p></p><p></p><p>If prices went down why would the holder exercise his option to pay above-market prices and demand that the rancher deliver?</p><p></p><p>Craig-TX</p></blockquote><p></p>
[QUOTE="Craig-TX, post: 59229, member: 39"] Please clarify a few points. It sounds like you are saying a rancher can/should write covered calls against the calves in his pasture? Not against a futures contract, but against his own stock on his own place? Bear in mind that we’re talking about cow calf operations, not backgrounding operations. Assuming he could, if a rancher sold a covered call for X price and the price dropped below X during the term of the option, why would the rancher want to buy back the call? If prices went down why would the holder exercise his option to pay above-market prices and demand that the rancher deliver? Craig-TX [/QUOTE]
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