Consider buying a call option on February live cattle futures (LEG26).
See on the daily bar chart for February live cattle futures that prices Wednesday saw a strong rebound from the steep downdraft of the prior five trading sessions. Wednesday’s price action suggests the bears overdid it to the downside and that a near-term market bottom is in place.
Fundamentally, the supply and demand balance for the U.S. cattle markets fully favor the bulls. U.S. supplies of cattle on feedlots are historically low, while U.S. consumer demand for beef at the meat counter remains robust despite high prices. A growing number of U.S. consumers want higher protein diets now.
Consider buying a call option on February live cattle futures, with an upside price objective of $245.00, or above. The option expires the first Friday in February.
IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any trades and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.
Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%):
Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.
On the date of publication, Jim Wyckoff did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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