Trading and Hedging with Agricultural Futures and Options

Todays Premier Guidebook for Understanding Agricultural Options and Making Them a Key Part of Your Trading and Risk Management Strategy Agricultural futures and options represent a vital niche in todays options trading world. Trading and Hedging with Agricultural Futures and Options takes an in-depth look at these valuable trading tools, and presents clear, proven strategies and techniques for both hedgers and traders to achieve their goals while minimizing risk. Relying on nuts-and-bolts techniques and examples as opposed to the mathematical models and theory favored by other options-trading manuals this practical, hands-on book discusses many topics, including: How hedgers and traders can use options effectively with realistic expectations Methods to understand price behavior including the "Greeks" (delta, gamma, vega, and theta) The importance of volatility and little-known ways to make it work to your advantage For producers and processors, agricultural futures and options are necessary components for controlling costs and hedging risks. For traders, they are proven vehicles for earning exceptional risk-adjusted profits. Whichever side of the aisle you are on, Trading and Hedging with Agricultural Futures and Options will provide you with the answers you need to effectively use these versatile tools and make them an integral part of your business.

James B. Bittman is a staff instructer at The Options Institute, the education division of the Chicago Board Options Exchange (CBOE), where he teaches seminars on options to investors in the United States and Europe. He is also on the facutly at the Illinois Institue of Technology, and holds a commodity options membership at the Chicago Board of Trade (CBOT). A successful options trader for more than 20 years, Bittman also wrote the best-selling, Options for the Stock Investor.

Foreword 

Acknowledgments 

Disclosures 

Introduction 

Part 1 The Basics of Futures and Options 1

Chapter 1 The Terminology of Futures and Options 3 

Chapter 2 Diagrams of Basic Trading Strategies 20 

Chapter 3 Diagrams of Basic Hedging Strategies 51 

Chapter 4 Why Futures and Options Have Value 70 

Chapter 5 Option Price Behavior 81 

Chapter 6 Volatility 96 

Chapter 7 Option Price Behavior II: The Greeks 117

Part 2 Hedging Strategies 143 

Chapter 8 Strategies for Long Hedgers 145 

Chapter 9 Strategies for Short Hedgers 171 

Chapter 10 Advanced Hedging Strategies 195

Part 3 Trading Strategies 223 

Chapter 11 Pricing and Graphing Strategies with OP-EVALF 225 

Chapter 12 Buying Options 244 

Chapter 13 Selling Options 265 

Chapter 14 Vertical Spreads 283 

Chapter 15 Straddles and Strangles 303 

Chapter 16 Ratio Spreads 320 

Chapter 17 Conclusion 334

Index 341