Our new Matrix Review blog was developed to show producers how Silveus Financial and our nCompassTM software helps producers visualize risk and scenario plan.  We will show hypothetical examples based on real risk management strategies we have developed with our clients.

A hypothetical farmer expects to plant 2000 acres of corn next year with an average yield of 200 bushels. He stands to make more than $100 an acre with corn at $3.91 with a break-even down around $3.40. Buying a CZ17 3.70 put and selling a CZ17 4.10-4.50 call spread against half his expected production for a total cost of 10 cents per bushel brings his break even all the way down to $3.15, and adds $60 an acre down at $3.00, while leaving his upside mostly intact should corn prices rally next year.

Standard Matrix: Note the fall in profitability from +107 to -13 if the price of CZ17 goes from $3.91 to $3.31.

The matrix + test: Note the improved profitability on the downside below $3.60.

The trade itself: Buying 40 CZ17 3.70 puts, Buying 40 CZ17 4.50 calls, Selling 40 CZ17 4.10 calls, net cost of 10 cts per bushel.

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