, Managing Risk in Todays Volatile Markets

1
??????,???????Managing Risk in Todays Volatile
Markets

• Presented by ???
• Mark A. Gold ?A.??
• Managing Partner ????
• Top Third Ag Marketing ?????????

2
???????Risk Management vs. Speculation

• ??????????????
• Top Third Ag Marketings bed rock philosophy
• ????????????
• WE MANAGE RISK, WE DONT SPECULATE
• ????????????????????
• We do not try to out guess markets ..we manage
  risk with commodity options
• ???????????????????
• Most farmers and brokers cannot predict market
  direction

3
?????The American Dilemma

• ????????????????????
• Many commercial grain companies are scaling back
  or eliminating marketing strategies for farmers.
• ??????,????2008-2010?????????
• In many cases, they will not provide cash grain
  bids for 2008-2010 new crop production.
• ????????????????,???????????
• The margin calls have become critical issues for
  the commercial grain companies and local
  elevators.

4
????????What are the producer alternatives?

• ?????,????????
• Do Nothing and HOPE prices stay viable.
• ??
• OR
• ??? ? Sell Futures
• ??? ? Sell options
• ??? ? BUY OPTIONS
• ????????????????
• THE ONLY NON-MARGINABLE POSITION IS BUYING
  OPTIONS.

5
??????The Value of Buying Options

• ?????????
• NO MARGIN CALLS.
• ?????????????
• Keeps potential higher prices in play while
  protecting against lower prices.
• ??????????????
• The risk is LIMITED to the cost of option plus
  fees.

6
???????The Art of Buying and Selling Options

• ??85??????????,????????????????????????????
• If 85 of all options expire worthless, the risk
  manager must have the experience to know when the
  cost of the options justify the risk of the
  expense.
• ????????????????
• When you sell an option it can be as important as
  when you buy it.

7
????CONTACT INFORMATION

• MARK A. GOLD ? ?A.??
• MANAGING PARTNER ? ????
• 100 S. WACKER DRIVE SUITE 1225
• CHICAGO, ILLINOIS 60606
• 312.706.7200
• www.topthird.com