Grain Guide 2018

Luan van der Walt, economist, Grain SA 106 GRAIN GUIDE 2018 Storage & marketing Trading mind map Long – buy Price rises = make a profit Buyer/miller hedge Short – sell Price falls = make a profit Producer hedge PUT CALL Futures hedging Buy put – ready to sell Floor price = strike price - premium In the money: Strike price > forward price Make a profit when price falls Possible loss = premium Possible profit = unlimited Sell put – obliged to buy Possible profit = premium Possible loss = unlimited Buy call – ready to buy Ceiling price = strike price + premium In the money: Strike price < forward price Make a profit when price rises Possible loss = premium Possible profit = unlimited Sell call – obliged to sell Possible profit = premium Possible loss = unlimited    