1/3/24
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Here are several different ways to put on a Hedge in the Option Markets. The first is the most basic and would put a floor in your price if the Futures were to break. Buying one Put locks in a price, and a cost, and limits your downside risk. The Hedges or Trades have more risk as you move down the list. The Hedges or Trades below start with buying Puts, to buying a Put Spread, to selling Calls to finance paying for the Puts, but that come with greater risk as well. All of the Trades are in October’25 or November’25 Feeder Cattle, as those are the two furthest months out. The Hedges or Trades are the same Strikes in both Contract Months, for comparative purposes. Please Call me if you have any questions.
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THE TRADES LISTED BELOW ARE BASED ON MY MARKET OPINION ONLY, ARE SPECULATIVE TRADES AND REFLECT MY LONG-TERM MARKET OUTLOOK, AND DOES NOT INCLUDE FEES AND COMMISSIONS.
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These trades were structured today, 1/3/25, using yesterday’s Settlement Prices
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October’25 Feeder Cattle were 266.67 ½ when these trades were structured.
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Buy 1 October’25 264 Put 12.32 ½
Price: 12.32 ½ Cost: $6,162.50/Trade Package, Plus Fees and Commissions
October’25 Feeder Cattle Expire 10/30/25 (300 Days)
MAXIMUM LOSS: LIMITED
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Buy 1 October’25 260 Put 10.70
Price: 10.70 Cost: $5,350.00/Trade Package, Plus Fees and Commissions
October’25 Feeder Cattle Expire 10/30/25 (300 Days)
MAXIMUM LOSS: LIMITED
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Buy 1 October’25 264 Put 12.32 ½
Sell 1 October’25 254 Put 8.57 ½
Price: 3.75 Cost: $1,875.00/Trade Package, Plus Fees and Commissions
October’25 Feeder Cattle Expire 10/30/25 (300 Days)
MAXIMUM LOSS: LIMITED
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Sell 2 October’25 286 Call 5.65
Buy 1 October’25 264 Put 12.32 ½
Price: 1.02 ½ Cost: $512.50/Trade Package, Plus Fees and Commissions
October’25 Feeder Cattle Expire 10/30/25 (300 Days)
MAXIMUM LOSS: UNLIMITED
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Sell 3 October’25 292 Call 4.20
Buy 1 October’25 264 Put 12.32 ½
Price: 0.27 ½ Credit Cost: $137.50 Credit/Trade Package, Plus Fees and Commissions
October’25 Feeder Cattle Expire 10/30/25 (300 Days)
MAXIMUM LOSS: UNLIMITED
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November’25 Feeder Cattle were 264.80 when these trades were structured.
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Buy 1 November’25 264 Put 13.50
Price: 13.50 Cost: $6,750.00/Trade Package, Plus Fees and Commissions
November’25 Feeder Cattle Expire 11/20/25 (321 Days)
MAXIMUM LOSS: LIMITED
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Buy 1 November’25 260 Put 11.80
Price: 11.80 Cost: $5,900.00/Trade Package, Plus Fees and Commissions
November’25 Feeder Cattle Expire 11/20/25 (321 Days)
MAXIMUM LOSS: LIMITED
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Buy 1 November’25 264 Put 13.50
Sell 1 November’25 254 Put 9.47 ½
Price: 4.02 ½ Cost: $ 2,012.50/Trade Package, Plus Fees and Commissions
November’25 Feeder Cattle Expire 11/20/25 (321 Days)
MAXIMUM LOSS: LIMITED
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Buy 1 November’25 264 Put 13.50
Sell 2 November’25 286 Call 5.20
Price: 3.10 Cost: $1,550.00/Trade Package, Plus Fees and Commissions
November’25 Feeder Cattle Expire 11/20/25 (321 Days)
MAXIMUM LOSS: UNLIMITED
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Buy 1 November’25 264 Put 13.50
Sell 3 November’25 292 Call 3.87 ½
Price: 1.87 ½ Cost: $937.50/Trade Package, Plus Fees and Commissions
November’25 Feeder Cattle Expire 11/20/25 (321 Days)
MAXIMUM LOSS: UNLIMITED
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CURRENT PRICE AND CURRENT VALUE REFLECTS TODAYS BID AND OFFER PRICE ONLY AND WILL CHANGE OVER TIME AND WITH VOLATILITY. THERE IS SUBSTANTIAL RISK OF LOSS TRADING FUTURES AND OPTIONS.
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If you would like to receive more information on the commodity markets, please use the link to join my email list Sign Up Now
-Bill
I have market commentary and option charts in
Pure Hedge – Livestock
Pure Hedge – Grain
Call for specific trade recommendations.
Email me for free research.
Bill Allen
Senior Account Executive
Direct: 1 312 957 8079
WALSH TRADING INC.
311 South Wacker Drive
Suite 540
Chicago, Illinois 60606
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.