Judging by today's FW he's now launched Stable - it seems live on his site too.
Official Launch 5th March
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Judging by today's FW he's now launched Stable - it seems live on his site too.
As a matter of interest, will you be offering Stable to your clients as an alternative to Options?The ultimate test will be how competitive Stable's insurance premiums are relative to option premiums. It's a great concept as long as it is price competitive! The other main difference is that any gains on options can be taken at any point between purchasing the option (insurance) and its expiry, whereas the Stable policy will be paid out only at the insurance expiry (this is known in the industry as a 'European Option')
As a matter of interest, will you be offering Stable to your clients as an alternative to Options?
I can't 'like' this postEnsus was running on mostly imported gear so was actually displacing feed stuffs as remember something like 2/3rds of what goes in comes out as DDG's etc.
Northern premiums have shrunk right back though.
C B
As a matter of interest, will you be offering Stable to your clients as an alternative to Options?
looks irrelevant for grain as exchanges exist for this.......other ag products like milk or meat might work, but with no exchange and subsequent lack of liquidity it'll be interesting to see how/if it works.
good luck to the team, looks like they have some big brains in the room.
From what I remember, Richard seemed to think the premium to hedge at £150 was £3/t (the put option bit) with no upside limit. £3/t is a lot less than £9.50, and you would guarantee yourself an effective minimum price of £147/t (£150 - 3).An option is simply insurance, your maximum loss/ outlay is your premium paid upfront, then you either claim on the insurance if the market falls (put option) or the insurance expires worthless and you have no further obligation. as @Clive says they have been used for decades by farmers around the world. As an example, a 'put option' to insure new crop wheat from further price falls between now and November -19 currently costs £9.50/T roughly £1/t per month, if it gets to November and prices are at £200/T then all you lose is the £9.5/T and you are free to sell your grain at £200 or hold it for a later sale. Farmers can open a demo account with someone like Saxo bank (https://www.home.saxo/en-gb) and see how simple purchasing this insurance is.
I think this is how it works: (please don’t think I am trying to teach you to suck eggs as you know more about this than me).I've had a look at the website. I might be wrong, but I don't think you can cash out the option when you want....from what I understand the "insurance" has to run it's full term, after which they will deem if a pay out is required (claim on your insurance). I could be wrong, but that's how I understand it, which if it is "insurance" is probably right, but not very good for covering volatility.
Anyone know what the usda report had to say today ?
I think this is how it works: (please don’t think I am trying to teach you to suck eggs as you know more about this than me).
You pay the premium (eg £3/t based on nov futures of £150. You then watch the markets of the nov futures. You can sell physical Nov wheat at any time (so you could sell it for £200/t or more) but you have to sell the physical wheat for November (with whatever merchant you wish) the wheat is then moved in November, and if the market has collapsed and the merchant only offers you £110, you get £110 off the merchant, and the difference minus the premium from stable (£40 - £3 = £37) effectively giving you a price of £147 on a collapsed market. If market goes up, you just lose your premium.
That’s how I interpreted it anyway, and that makes it simple than an option to my mind
That would be great - I noticed someone just used Stable to insure 100 tonnes of feed wheat against AHDBs index price of £150 per tonne in November, so it's started to trade.That’s exactly how an option works apart from you can cash out of the option at any point and don’t actually have to deliver physical wheat
I like the way stable simplifies it though so think it will bring these tools to many more. I have been in touch with Richard today about a TFF member rate that could give users here a discount on the premiums ....... watch this space
From what I remember, Richard seemed to think the premium to hedge at £150 was £3/t (the put option bit) with no upside limit. £3/t is a lot less than £9.50, and you would guarantee yourself an effective minimum price of £147/t (£150 - 3).
I've just been through the quote system and is is far simpler than that from what I can see. I just received a quote to insure 100 tonnes of fead wheat for £5.23 per tonne till November which protects me from a potential loss of £6,522.65.I think this is how it works: (please don’t think I am trying to teach you to suck eggs as you know more about this than me).
You pay the premium (eg £3/t based on nov futures of £150. You then watch the markets of the nov futures. You can sell physical Nov wheat at any time (so you could sell it for £200/t or more) but you have to sell the physical wheat for November (with whatever merchant you wish) the wheat is then moved in November, and if the market has collapsed and the merchant only offers you £110, you get £110 off the merchant, and the difference minus the premium from stable (£40 - £3 = £37) effectively giving you a price of £147 on a collapsed market. If market goes up, you just lose your premium.
That’s how I interpreted it anyway, and that makes it simple than an option to my mind
I just received a quote to insure 100 tonnes of fead wheat for £5.23 per tonne till November which protects me from a potential loss of £6,522.65. Pretty good, especially as I benefit from the rise.From what I remember, Richard seemed to think the premium to hedge at £150 was £3/t (the put option bit) with no upside limit. £3/t is a lot less than £9.50, and you would guarantee yourself an effective minimum price of £147/t (£150 - 3).
I checked that - they are regulated by the FCA and covered by Lloyds. So legit.Are they regulated in any way, what is to stop them collecting premiums until harvest, and then going into administration just when everyone is looking forward to a £20/ton payout?
I just gone long on wheat it's not gambling when its other peoples money !
seriously you shroud give it a try with a demo account - even if you never have any intention of trading futures or opinion for real with actual money its a great way to learn how it all works
Weirdly I'm also loaded on my demo account but not sure if I've got the stomach to go live and gamble with the family farm's cash! The insurance route seems quite a bit safer. I'll leave my gambling to the GGs!Demo accounts are strange.
I've a igc demo account trading cfds. With a fortune in it. Meanwhile in my real life account ive lost a lot of money. I dread to think what my wife would say if she found out.
Looked like easy money harvest 2018 with drought and market climbing by large amounts daily.