How to Hedge Jacobsen Covered Commodities

Beginning today, commercial entities that wanted to hedge or trade any Jacobsen covered product will have that opportunity using Stable Price.

Stable Price will offer call (call spreads) and put (put spreads) options on Jacobsen covered products using the Jacobsen data to settle each trade. This process will allow consumers to hedge their exposure with triple-A rated insurance companies as their counter-parties.

This product will allow customers to trade derivatives using the most trusted publishing company in the business. The products are available now, allowing you to trade immediately using our trusted data. The types of options that are available are both call options and put options.

To hedge, you can either buy a call option, which protects you if prices rise. Alternatively, you can buy a put option to protect you against prices falling. You will pay a premium for the right to either buy or sell in both cases. The initial product offered by Stable price is a call spread or put spread, which means that the protection value is capped.

For example, you can purchase an $8-12 call spread on organic corn, capturing any movement between $8-$12 per bushel. Above $12, you will not be protected.

Stable Price will offer both average price options and European style options. Average price options measure the average price calculated during the month versus the strike price, while European style options measure the strike price versus the last trading day of the month. If you are a Premium client of The Jacobsen we will calculate the averages for you. You will also see historical averages that can help you determine the most accurate strike price to use when you purchase calls and puts.

If you trade options with Stable Price, you will face a counterpart backed by Triple rated insurance companies, including AON. The Jacobsen is one of the few companies meeting IOSCO compliance, considered the most trusted commodity price discovery source.

If you are looking for more information about how you can hedge please contact David Becker at [email protected].