Discussion
This graph shows daily settlement prices for Dec. 06 futures from
about fourteen months out through expiration. The blue and pink
lines show the premium value associated with 55-cent put and call
options, respectively. This was a year much like the previous one. Prices seesawed back and forth within the 50s. This
sort of price pattern is more difficult to plan for since there
is little market opportunity for setting a meaningful price floor
with upside flexibility. One strategy here would be to pay more
put option premium for a higher, more meaningful price floor, and
finance this by selling either out of the money puts or out of
the money calls.
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