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Volatility
Options fall into the category of being slightly undervalued in non-volatile markets in the weekly options report. Ask about the Weekly Option's Report for more information or watch our video.
Term Structure
Notes:
Contract Size - 40,000 lbs (~ 18 MT)
Tick Size: $.00025 per pound (=$10 per contract)
Trading Hours: CME Globex: Sunday - Friday 6:00 p.m. - 5:00 p.m. Eastern Time (ET) with trading halt 4:15 p.m. - 4:30 p.m.
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Live Cattle
Below are charts for reference.
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Strategies
Below is a butterfly It has positive time decay and benefits from an decline in volatility. Transitioning from summer into fall months, the option spread has the potential to benefit from both an increase in price and slight decline in implied volatility given negative vega. It would lose if price moved beyond range extremes and would need to be adjusted or volatility suddently picked up.
The % yield shown in the diagrams below represent an estimated return on margin from projected dates shown below. The structure has positive time decay which is an advantage over holding outright options.
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