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 soybean farmer has 50,000 unpriced bushels that he plans to sell in early 2017. He still faces some price risk on these bushels, losing about $20 an acre in profitability if the price falls to $9.00 over the next two months. Buying a cheap January put option to cover that risk for the next 6 weeks can cap the loss to the downside in the short term.

Standard Matrix: Note the fall in profitability from +161 to +131 in the center column.

The matrix + test: Note the new profitability of +153 locked in all the way down, regardless of price

The trade itself: Buying 10 SF17 9.70 puts for .15 cents a bushel. 

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