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Now it's the too prolonged of cold temperatures that may be hurting the wheat crop here. We'll see. Gotta wait on my GC opts to expire Monday before considering anything....
Can you help answer these questions from other members on NexusFi?
I'm still trying to get familiar with my likely give up points on these trades. Right now I calculate that if wheat goes to 790 in the next 2 weeks (April 3) and assuming volatility remains constant (hard to say) that would be my give up point on this trade - WK13 870 calls (starting margin was 600 per call with 1200 of additional buffer). I don't anticipate this as being too likely but I also like to be prepared.
Typically when I've traded stock options doing a covered call can be a viable way to reduce some exposure. But when I enter a long call at say 880 in the OX trade calculator it actually increases my margin. That just seems weird. Adding say a single bought call for every 2 sold calls would cut my delta in half (getting me back to less than 0.02) so not sure why this would increase risk. Does this have anything to do with OX miscalculating margin on the first contract as you mentioned earlier in the thread?
Yes. Write down what the margin is for a quantity of one each. Then change the quantity to two each. Recalculate. Subtract the margin for one from the margin for two. The difference should be the correct margin.
As far as the point to bail out of a position. You have 1200 excess. If the increased margin plus the increased premium passes $1200 it is time to get out.
The 880 call is only 12.50 less than the 870. Buying the 880 and paying fees to buy it wipes out the profit from one of the short options. I'm not sure if it is worth it to buy 880s rather than just bailing out and moving on.
