Are Live Cattle Futures ready to mooooove lower?
The weekly Live Cattle chart below shows the price uncertainty that the trade has been subjected to since the run up to historic highs back in late 2014. Note how the weekly high to low ranges expanded starting in the beginning of 2014 and continues even to today’s trade. This is a good indication of the sustained volatility in both the futures and options contracts. Lead month futures have rallied from the October contract low of $93.40 to this week’s December’s contract high of $120.32 in less than nine weeks. This rally coupled with the implied price uncertainty in the Live Cattle options premium presents a hedging opportunity in my opinion. Risk reversal strategies allow the hedger to create a protective floor price while accepting a potential ceiling price buy buying at the money puts and selling out of the money calls. We’d be glad to create a customized strategy to fit your hedging or speculative needs. Call me @ 800-786-4475 or email me @ [email protected]for more specific information and trading ideas.
There is significant risk involved in trading futures and/or options on futures. Futures and/or options of futures trading may not be suitable for all investors. Investors should consider these risks and evaluate their suitability based on their financial conditions. Past performance is not indicative of future results.