Feeder cattle broke down to the lower part of its 159.90 – 155.525 trading on Wednesday October 10, 2018. It made its low at 155.725 and settled at 156.175. The aggressive purchasing of feeder cattle seems to have come to a halt. Muddy conditions in feedlots plus calf weaning and colder weather lead to illness risk creating a cautious buyer for feeder cattle. If feeders close below the 155.525 level we could see price trade to lower levels. Hedgers could buy the November 152.00 puts one time and sell 2 November 162.00 calls at even money plus commissions and fees for downside protection.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Friday, October 12th at 2:30 pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon completion of the webinar.
**Call me for a free consultation for a marketing plan regarding your livestock needs.* *
Senior Market Strategist
Walsh Trading, Inc.
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.