FEEDER CATTLE:
Opinion: I am of the opinion that with the potential of a drop in production, Feeder Cattle price are cheap to buy right now. I will revise this opinion as market conditions continue to evolve.
Action:
- Buy: October FC 189 call for $5
- Expires: 10/27
- Risk: $2500 (premium cost) + Fees [5 * $500 = $2500]
- Potential Max Profit: Theoretically the profit potential is unlimited but with feeder cattle having the potential to reach the $200 level the profit potential would be $4400 at expiration after fees and costs.
- Breakeven [at expiration]: $194.05
LIVE CATTLE:
Opinion: I am of the opinion that, similar to feeder cattle, the potential of a drop in production but also a drop in weights, will cause the prices to rally. Right now, waiting for the rally in the LC market would be the best option. I will revise this opinion as market conditions continue to evolve.
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