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Diversified Option Selling Portfolio
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Diversified Option Selling Portfolio

  #461 (permalink)
Market Wizard
Linz Austria
 
Futures Experience: Advanced
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myrrdin View Post
Just a reminder: Friday the USDA crop report will be published at 11 am (Chicago Time) / 18.00 (Central European Time).

I intend to by back the corn calls before the report, and to hold the soybeans calls and the cotton calls. COT data for corn is very bullish, and a surprising result could cause funds to cover their shorts.

Best regards, Myrrdin

Bought back the corn calls with a profit of 15 - 20 %.

Best regards, Myrrdin

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  #462 (permalink)
Market Wizard
Linz Austria
 
Futures Experience: Advanced
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Rolled down the SF C11 to the SF C10.4 and took profit of approx. 40 % on the C11.

Best regards, Myrrdin

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  #463 (permalink)
Market Wizard
Linz Austria
 
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Added the LCG7 P100 to the LCZ P100, and now hold a full position.

According to MRCI the seasonal chart for the cash price clearly shows upwards, both futures are significantly undervalued compared to cash.

Best regards, Myrrdin

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  #464 (permalink)
Trading Apprentice
Chicago, IL, USA
 
Futures Experience: Beginner
Platform: ThinkorSwim Tradestation
Favorite Futures: ES, CL, GC
 
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myrrdin View Post
Added the LCG7 P100 to the LCZ P100, and now hold a full position.

According to MRCI the seasonal chart for the cash price clearly shows upwards, both futures are significantly undervalued compared to cash.

Best regards, Myrrdin

This may sound silly, but how do you determine whether these futures are underpriced? I am short puts on live cattle as well based on a recent recommendtion by Carley.

From reading some of the past comments you've posted, it appears that a large part of the discussion is centered around the correlation between cash cattle and futures, and when that discount/premium gets much more than whjat it has been historically, one could look into opening a trade.

My question is whether you'd ever view this the other way around. As in, can it be that he cash cattle itself is under/overpriced? Rather than assuming that cash cattle is traded correctly? Based on my very limited understanding of the meats, future pricing is based in large part to the placement of feeder cattle on feed and therefore get an idea with regards to what the cutout supply will look like at that time, compared to projected/historic/seasonal demand patterns at that time.

Just curious whether you had any view on this. If I'm totally off my base please let me know. Thanks!

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  #465 (permalink)
Trading for Fun
westhills california US
 
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Hey myrrdin

Where are you on CL?
Do you see any attractive trades you would place ? I thing you said you were short calls a while a go?

anyone esle?

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  #466 (permalink)
Market Wizard
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rajab View Post
Hey myrrdin

Where are you on CL?
Do you see any attractive trades you would place ? I thing you said you were short calls a while a go?

anyone esle?

Yes, I am still short the CLF C58-C63 spread. I rolled into this spread after taking profit on the CLF C64.

I intend to hold this spread until a close above the August high.

Best regards, Myrrdin

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  #467 (permalink)
Market Wizard
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ys91 View Post
This may sound silly, but how do you determine whether these futures are underpriced? I am short puts on live cattle as well based on a recent recommendtion by Carley.

From reading some of the past comments you've posted, it appears that a large part of the discussion is centered around the correlation between cash cattle and futures, and when that discount/premium gets much more than whjat it has been historically, one could look into opening a trade.

My question is whether you'd ever view this the other way around. As in, can it be that he cash cattle itself is under/overpriced? Rather than assuming that cash cattle is traded correctly? Based on my very limited understanding of the meats, future pricing is based in large part to the placement of feeder cattle on feed and therefore get an idea with regards to what the cutout supply will look like at that time, compared to projected/historic/seasonal demand patterns at that time.

Just curious whether you had any view on this. If I'm totally off my base please let me know. Thanks!

You are touching a very important point.

For many years future prices followed cash prices rather reliably. If you had an idea were cash prices should be when the future expires, and futures were over- or undervalued compared to this price, you could sell puts or calls, and make money. The only remaining problem were sudden production problems, eg. deseases.

This correlation seems to have changed about a year ago, and it took me some time to realize it. (If you have a look at my older entries in this thread you will see a number of losses for cattle options.) I do not know the reason. Some People argue that it has to do with the future contract. Others have the opinion that cash price is determined based on a very small amount of cattle. May be, but these things have not changed recently. But it is obvious that the difference between cash and cattle price is not as reliable as some years ago.

Best regards, Myrrdin

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  #468 (permalink)
Market Wizard
Linz Austria
 
Futures Experience: Advanced
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Broker/Data: DeCarley, RJO
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Posts: 974 since Nov 2014
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USDA September Stocks Report will be out tomorrow, 11am Chicago Time. I do not consider this report to be a major market mover, but you never know ...

Tomorrow's USDA Quarterly Hogs & Pigs Report, published after the close, will be of major importance for livestock & grains.

Large moves in hog price and perhaps in corn price may follow on Monday.

Best regards, Myrrdin

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  #469 (permalink)
Market Wizard
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myrrdin View Post
You are touching a very important point.

For many years future prices followed cash prices rather reliably. If you had an idea were cash prices should be when the future expires, and futures were over- or undervalued compared to this price, you could sell puts or calls, and make money. The only remaining problem were sudden production problems, eg. deseases.

This correlation seems to have changed about a year ago, and it took me some time to realize it. (If you have a look at my older entries in this thread you will see a number of losses for cattle options.) I do not know the reason. Some People argue that it has to do with the future contract. Others have the opinion that cash price is determined based on a very small amount of cattle. May be, but these things have not changed recently. But it is obvious that the difference between cash and cattle price is not as reliable as some years ago.

Best regards, Myrrdin


Quoting 
Cash sales negotiated closer to slaughter accounted for about 21 percent in 2015, down from 52 percent in 2005.

USDA requires meat packers to report online cattle auction deals | Reuters

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  #470 (permalink)
Trading Apprentice
Chicago, IL, USA
 
Futures Experience: Beginner
Platform: ThinkorSwim Tradestation
Favorite Futures: ES, CL, GC
 
Posts: 14 since Nov 2015
Thanks: 36 given, 7 received


Cattle limit down today. Looking at the report, I'm not sure I see the reason for a massive downward move like this. Anyone has any insights to understanding this much of bearishness?

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