Fed Cattle
Marketing and Risk Management Alternatives

Date: July 29, 2013

 

             Futures Market

   The Short Hedge
                 Creating a fixed price by selling Fed Cattle futures

  Market   Sale Historical Expected
Contract Close Month Basis Net Price
Oct $125.98 Sep -$2.20 $123.78
Dec $128.73 Nov $0.26 $128.99
Feb $130.05 Jan -$1.94 $128.11

 
 

                       Options Market

Live Cattle Option Quotes
Strike Put Oct Call Strike Put Dec Call Strike Put Feb Call
$122.00 $0.70     $124.00 $1.13     $126.00 $1.83    
$124.00 $1.18     $126.00 $1.63     $128.00 $2.45    
$126.00 $1.95     $128.00 $2.33     $130.00 $3.25    
$128.00     $1.08 $130.00     $2.03 $132.00     $2.30
$130.00     $0.50 $132.00     $1.25 $134.00     $1.53

              Buying a Put
                  Creating a minimum price by buying Fed Cattle Put Options

  Put Sep Expected   Put Nov Expected   Put Jan Expected
Strike Premium Basis Min. Price Strike Premium Basis Min. Price Strike Premium Basis Min. Price
$122.00 $0.70 -$2.20 $119.10 $124.00 $1.13 $0.26 $123.13 $126.00 $1.83 -$1.94 $122.23
$124.00 $1.18 -$2.20 $120.62 $126.00 $1.63 $0.26 $124.63 $128.00 $2.45 -$1.94 $123.61
$126.00 $1.95 -$2.20 $121.85 $128.00 $2.33 $0.26 $125.93 $130.00 $3.25 -$1.94 $124.81

 

        The Fence
                  Creating a minimum price at a cheaper cost
    by Buying Fed Cattle Put Options and Selling Call Options

Put Call Put Call Sep Expected Expected
Strike Strike Premium Premium Basis Min. Price Max Price
$124.00 $128.00 $1.18 $1.08 -$2.20 $121.70 $125.70
$122.00 $130.00 $0.70 $0.50 -$2.20 $119.60 $127.60
             
Put Call Put Call Nov Expected Expected
Strike Strike Premium Premium Basis Min. Price Max Price
$126.00 $130.00 $1.63 $2.03 $0.26 $126.66 $130.66
$124.00 $132.00 $1.13 $1.25 $0.26 $124.38 $132.38
             
Put Call Put Call Jan Expected Expected
Strike Strike Premium Premium Basis Min. Price Max Price
$128.00 $132.00 $2.45 $2.30 -$1.94 $125.91 $129.91
$126.00 $134.00 $1.83 $1.53 -$1.94 $123.76 $131.76

 

          

If you have question, comments or suggestions for this web page please send me an e-mail:
                 Dillon M Feuz