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G86-772 Using Options To Follow A Rising Market, Lynn H. Lutgen
G86-772 Using Options To Follow A Rising Market, Lynn H. Lutgen
University of Nebraska-Lincoln Extension: Historical Materials
This is number five in a series of six NebGuides on Agricultural Options. It discusses how to use the options market effectively to protect us from our own emotions.
An interesting aspect of marketing is psychological. Many people make a mental decision to market grain when a specific price is reached. However, when the market begins to trend upward and hits that imaginary price level, the farmer previously facing low prices is 1) optimistic for even higher prices, and 2) wants to obtain the highest possible price to offset losses incurred during low prices. What generally happens is 1) no …
G86-771 Evaluating Options Vs. Futures Contracts, Lynn H. Lutgen
G86-771 Evaluating Options Vs. Futures Contracts, Lynn H. Lutgen
University of Nebraska-Lincoln Extension: Historical Materials
This is number four in a series of six NebGuides on agricultural options. It explains how to evaluate options vs futures contracts.
Options and futures contracts are similar. Both represent actions that occur in the future. Futures markets are contracts to either accept or deliver the actual physical commodity, while an option contract is a contract on the underlying futures contract. Options contracts give the farmer the right, but not the obligation, to buy or sell an underlying commodity. This underlying commodity is a futures contract. Due to these similarities and the fact that options are based on a futures …