Dated:  November 2015

HOW TO GUIDE: 
Using a 'Cash and Call' strategy to manage your grain price.

Using derivatives doesn’t have to be confined to the use of banks swaps for futures contracts to hedge the forward price of grain.  As in all financial markets, there is a large range of products that can be used to ‘hedge’ price risk in grain markets. 

In this guide, we look at the ‘Cash and Call’ strategy. This strategy can be used in markets when physical stock needs to be sold for cash flow, but the grower wants to benefit from any rise in price.

After reading this guide, you will know:

  • What call options are and how they work
  • How you can use the physical grain market ('Cash') and call options ('Call') together to achieve cash flow and benefit from a rise in grain prices

This guide explains these concepts using simple, worked examples.

Can you afford not to know this?