There is no doubt that the price of sugar is going up, with India likely to import an additional 1 million metric tons of sugar. That's without doubt a price mover.
How can derivatives be used to hedge against the price increase?
SELL A PUT OPTION and BUY a CALL OPTION.
Some articles on the subject:
http://online.wsj.com/article/SB126320161403624393.html
http://in.reuters.com/article/domesticNews/idINDEL39639220090217
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Glad to see you chose to post publicly - very few do.
ReplyDeleteHi there very cool blog. I finally found it.
ReplyDeleteDoug
Hello again. I was reading in Bloomberg that the price of sugar is at a 2 decade high. India is the biggest consumer of sugar in the world and they are stockpiling along with Indonesia because of expectations of a supply deficit due to weather conditions. Sugar futures are up in London today. Since they are stockpiling do you think they are trading in derivatives to protect their prices? There was no mention of it in the article.
ReplyDeleteI am happy you saw the increase of the sugar price. The articles were just predicting a rise of the sugar price.
ReplyDeleteOne of the Minister in India just signaled that the country will be buying more sugar , billions worth of sugar. As an investor you have to lock the price has fast as possible.You have to buy a call option on sugar and As sure as I am now we really don't care about hedging we go all in for the profit then we sell high :)