Sales are then made before it drops lower. If the down trend continues, additional sales are made before prices drop even further. This strategy requires discipline and is more difficult to do than a scale-up strategy. The idea behind both strategies is to increase the average price received. Minimum price contracts, if available, are another way to make sales and avoid being wrong if prices go higher.
Options provide flexibility in marketing.
The effect is similar to a minimum price contract . A price floor is established, but the top side is left open. Options also have a cost in the form of a premium paid for the rights obtained. Call options can be used to offset previous sales. A call option provides the right to purchase a futures contract and, in effect, re-own grain that has already been sold.