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NEND | Not sure what crops you are insuring, or what coverage level you are buying, but using RP-HPE is not half the premium. At least here. I just ran a quote on our 3 main crops. Wheat - $3.05/ac, canola - $2.85/ac, and soybeans were $3.52/ac savings versus having the harvest price option (HPO).
Now, if you are buying enterprise versus optional, then, yes, the premium is roughly half. And as far as commission levels go, the percentage is the same regardless on HPE or HPO. Obviously, they get paid more on HPO, as the premium is slightly higher than HPE.
Math would say that if I took the HPE option and save roughly $3.00/ac on wheat and then turn around and use the options market to price protect, I'm going backwards.
70bu APH @ 70% coverage = 49 bu guarantee
Cost of going out and buying a Sept '25 call at $6.60/bu (current futures at $6.30) is $0.31. Using that, and protecting the 49 bu would cost me $15.19/ac. AND, we are not counting the $.30 price difference between current market and strike price.
So no, HPE does not work here. But again, not all areas and operations are the same. | |
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The case for harvest price exclusion (RP-HPE)
