Feeder Cattle
Marketing and Risk Management Alternatives
Date: July 29, 2013

                    Futures Market

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

  Market   Sale Historical Expected
Contract Close Month Basis Net Price
Sep $156.85 Sep $4.29 $161.14
Oct $158.63 Oct $4.36 $162.99
Nov $159.90 Nov $3.10 $163.00

 
 

                                Options Market

Feeder Cattle Option Quotes
Strike Put Sep Call Strike Put Oct Call Strike Put Nov Call
$152.00 $0.80     $154.00 $1.28     $156.00 $1.85    
$154.00 $1.28     $156.00 $1.85     $158.00 $2.53    
$156.00 $2.00     $158.00 $2.60     $160.00 $3.40    
$158.00     $1.85 $162.00     $1.73 $162.00     $2.40
$160.00     $1.13 $164.00     $1.13 $164.00     $1.68

                              Buying a Put
                                Creating a minimum price by buying Feeder Cattle Put Options
  Put Sep Expected   Put Oct Expected   Put Nov Expected
Strike Premium Basis Min. Price Strike Premium Basis Min. Price Strike Premium Basis Min. Price
$152.00 $0.80 $4.29 $155.49 $154.00 $1.28 $4.36 $157.08 $156.00 $1.85 $3.10 $157.25
$154.00 $1.28 $4.29 $157.01 $156.00 $1.85 $4.36 $158.51 $158.00 $2.53 $3.10 $158.57
$156.00 $2.00 $4.29 $158.29 $158.00 $2.60 $4.36 $159.76 $160.00 $3.40 $3.10 $159.70

 

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

Put Call Put Call Sep Expected Expected
Strike Strike Premium Premium Basis Min. Price Max Price
$154.00 $158.00 $1.28 $1.85 $4.29 $158.86 $162.86
$152.00 $160.00 $0.80 $1.13 $4.29 $156.62 $164.62
             
Put Call Put Call Oct Expected Expected
Strike Strike Premium Premium Basis Min. Price Max Price
$156.00 $162.00 $1.85 $1.73 $4.36 $160.24 $166.24
$154.00 $164.00 $1.28 $1.13 $4.36 $158.21 $168.21
             
Put Call Put Call Nov Expected Expected
Strike Strike Premium Premium Basis Min. Price Max Price
$158.00 $162.00 $2.53 $2.40 $3.10 $160.97 $164.97
$156.00 $164.00 $1.85 $1.68 $3.10 $158.93 $166.93

           

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                  Dillon M Feuz