Feeder Cattle
Marketing and Risk Management Alternatives
Futures Market
The Short Hedge
Creating a fixed price by selling Feeder Cattle futures
| |
Market |
Sale |
Historical |
Expected |
| Contract |
Close |
Month |
Basis |
Net Price |
| Jan |
$149.48 |
Jan |
$2.11 |
$151.59 |
| Mar |
$151.80 |
Mar |
$3.24 |
$155.04 |
| Apr |
$153.33 |
Apr |
$4.23 |
$157.56 |
|
|
|
|
|
Options Market
| Feeder Cattle Option Quotes |
| Strike |
Put |
Jan |
Call |
Strike |
Put |
Mar |
Call |
Strike |
Put |
Apr |
Call |
| $147.00 |
$0.45 |
|
|
$148.00 |
$2.23 |
|
|
$148.00 |
$2.30 |
|
|
| $148.00 |
$0.73 |
|
|
$150.00 |
$2.95 |
|
|
$150.00 |
$2.95 |
|
|
| $149.00 |
$1.10 |
|
|
$152.00 |
$3.80 |
|
|
$152.00 |
$3.70 |
|
|
| $151.00 |
|
|
$0.68 |
$154.00 |
|
|
$2.65 |
$156.00 |
|
|
$2.98 |
| $152.00 |
|
|
$0.38 |
$156.00 |
|
|
$1.90 |
$158.00 |
|
|
$2.18 |
|
|
|
|
|
|
|
|
|
|
|
|
Buying a Put
Creating a minimum price by buying Feeder Cattle Put Options
| |
Put |
Jan |
Expected |
|
Put |
Mar |
Expected |
|
Put |
Apr |
Expected |
| Strike |
Premium |
Basis |
Min. Price |
Strike |
Premium |
Basis |
Min. Price |
Strike |
Premium |
Basis |
Min. Price |
| $147.00 |
$0.45 |
$2.11 |
$148.66 |
$148.00 |
$2.23 |
$3.24 |
$149.01 |
$148.00 |
$2.30 |
$4.23 |
$149.93 |
| $148.00 |
$0.73 |
$2.11 |
$149.38 |
$150.00 |
$2.95 |
$3.24 |
$150.29 |
$150.00 |
$2.95 |
$4.23 |
$151.28 |
| $149.00 |
$1.10 |
$2.11 |
$150.01 |
$152.00 |
$3.80 |
$3.24 |
$151.44 |
$152.00 |
$3.70 |
$4.23 |
$152.53 |
|
|
|
|
|
|
|
|
|
|
|
|
The Fence
Creating a minimum price at a cheaper cost
by Buying Feeder Cattle Put Options and Selling Call Options
| Put |
Call |
Put |
Call |
Jan |
Expected |
Expected |
| Strike |
Strike |
Premium |
Premium |
Basis |
Min. Price |
Max Price |
| $148.00 |
$151.00 |
$0.73 |
$0.68 |
$2.11 |
$150.06 |
$153.06 |
| $147.00 |
$152.00 |
$0.45 |
$0.38 |
$2.11 |
$149.04 |
$154.04 |
| |
|
|
|
|
|
|
| Put |
Call |
Put |
Call |
Mar |
Expected |
Expected |
| Strike |
Strike |
Premium |
Premium |
Basis |
Min. Price |
Max Price |
| $150.00 |
$154.00 |
$2.95 |
$2.65 |
$3.24 |
$152.94 |
$156.94 |
| $148.00 |
$156.00 |
$2.23 |
$1.90 |
$3.24 |
$150.91 |
$158.91 |
| |
|
|
|
|
|
|
| Put |
Call |
Put |
Call |
Apr |
Expected |
Expected |
| Strike |
Strike |
Premium |
Premium |
Basis |
Min. Price |
Max Price |
| $150.00 |
$156.00 |
$2.95 |
$2.98 |
$4.23 |
$154.26 |
$160.26 |
| $148.00 |
$158.00 |
$2.30 |
$2.18 |
$4.23 |
$152.11 |
$162.11 |
|
|
|
|
|
|
|
If you have question, comments or suggestions for this
web page please send me an e-mail:
Dillon M Feuz