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Premium Plus Contract
Get a premium on a sale made today in exchange for a firm offer with a set
strike price and strike date. Get that little extra out of the market
today while starting your marketing plan with an offer.
What is a Premium Plus Contract?
The POET Premium Plus Contracts pays a per-bushel
premium on the initial quantity of Corn, when you commit
to sell a like quantity in a deferred delivery period at
a specified target price. Should the target price trigger on the market
close of the strike date, then the target offer becomes a contract
for the agreed-upon delivery period.
Advantages:
- Good option if you think the market is headed sideways or downward
- You choose the target price and set date
- Take your premium up front
- Potentially price future deliveries above the current market price
- If the price is below the target price on the market close at the target date, then there are no additional bushels required to be delivered and no repayment of premium
Disadvantages
- There is a double obligation tied to this contract
- The only time the target price can be set is on the target date if the market closes at or above the set target price
- Regardless of how high the futures go, the initial target price plus/minus the local basis will be the set cash price
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