![]() We present a number of common arguments for and against investing in this commodity. ![]() Important: This is not investment advice. Reasons to Trade Feeder Cattle Instrumentsīuying feeder cattle can be a great addition to a trading portfolio for the following reasons: You should consider whether you can afford to take the high risk of losing your money. Between 74%-89% of retail investor accounts lose money when trading CFDs. While there is no ETF that specifically cover feeder cattle prices, there are three ETFs that trade in general livestock:ĬFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. These financial instruments trade as shares on exchanges in the same way that stocks do. Therefore, options traders must be right about the size and timing of the move in feeder cattle futures to profit from their trades. Options buyers pay a price known as a premium to purchase contracts.Īn options bet succeeds only if the price of feeder cattle futures rises above the strike price by an amount greater than the premium paid for the contract. However, options also have a strike price, which is the price above which the option finishes in the money. Options are also a derivative instrument that employs leverage to trade commodities.Īs with futures, options have an expiration date. The CME offers an options contract on feeder cattle futures. Trading futures requires a high level of sophistication since factors such as storage costs and interest rates affect pricing. If prices decline, traders must deposit additional margin in order to maintain their positions.Īt expiration, feeder cattle contracts are financially settled. The contract trades globally on the CME Globex electronic trading platform and has eight expiration months: January, March, April, May, August, September, October, and November.įutures are a derivative instrument through which traders make leveraged bets on commodity prices. The Chicago Mercantile Exchange (CME) offers a futures contract that settles into 50,000 pounds (23 metric tons) of feeder cattle. Traders have several ways to get exposure to feeder cattle trading products: Feeder Cattle Futures Reasons to Trade Feeder Cattle Instruments.For more information please view the Barchart Disclosure Policy here. All information and data in this article is solely for informational purposes. On the date of publication, Alan Brugler did not have (either directly or indirectly) positions in any of the securities mentioned in this article. Last week’s pace was 250,000 while the same week last year was also 247k.Īug 23 Cattle closed at $181.275, up $1.150, ![]() USDA estimated FI cattle slaughter at 127k head for Tuesday, that set the week’s running total at 247k head. USDA reported Wholesale Boxed Beef prices were mixed on Tuesday, with a $2.10 drop in Choice and an 87 cent increase for Select. The CME Feeder Cattle Index was $238.45 after a 72 cent increase for 7/17. Cash trade has been limited on Monday and Tuesday. The feeder cattle market fell $0.95 to $1.42 on the higher feed costs. That was a new high close for August, though futures stayed under their LoC high set yesterday.
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