Hedge signal from Feeder and Live Cattle futures?

[TechAnalyst]

I just wanted to provide a quick update in case anyone had followed this.

With the March feeder cattle futures now under $138/cwt, the $145 puts would be more than $7/cwt in the money. Given the fact they expire March 29th, I would protect profits by selling the $145 puts for a $5/cwt profit and buy a $138 put for $1 in case the market does fall to the $132 level by next Thursday.

It may not be worth taking profits on the $140 puts yet but they could be rolled down in the same manner. That said, if the market falls to $135 this week, I would sell these as well for $5 or more to capture the profit.

[farming101]

Thanks for the update.
What would be a ballpark for commission on the trade?

With the crash in the CAD feeder cattle in AB are steady to higher since Jan 31

[TechAnalyst]

The commissions would range from $10/option if done with a self directed online account to around $100/option if done through a full service broker.

The 145 puts would have generated a $2500 USD profit to protect about 60 x 800lb yearlings with $10 to $100 coming off for commissions.

If the 138 puts were purchased to keep the price insurance in place, that would cost $1/cwt or $500 USD with another $10 to 100 commission.

It has worked very well to have the breaking Canadian dollar cushion the setback on the cattle futures.

[farming101]

Thanks