Put options: a price floor
Buying a put sets a floor under futures for the cost of the premium. If prices rise, you lose only the premium.
A put option gives the right, not the obligation, to sell futures at a set price (the strike). If futures fall below the strike, the put gains value and offsets the lower cash price.
The most you can lose on a bought put is the premium you paid, plus fees. There's no margin call on a bought option.
Premiums cost more when markets are volatile and when there's more time to expiration. Our options page estimates premiums for any strike.
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General education about how marketing tools work. Not advice to buy, sell or hedge; talk with your elevator, broker, lender or crop insurance agent about your own situation.