An Illustration Example 1. December Corn Put 1. Select the appropriate contract month December 2. Select the appropriate type of option Put 3. Option buyer does not receive margin calls.
Maximum loss is limited to the premium amount.
Eliminates the opportunity to participate in higher cash market prices. Requires a margin deposit, and margin calls may occur if prices move higher. The plus references the fact that this is the minimum price expected from a cash sale projected by buying the put option. In the event of higher prices at harvest, the net price received will be higher. You can buy more or less price insurance by buying options with different strike prices and premiums.