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Investing at feedlot
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<blockquote data-quote="alohacattle" data-source="post: 846056" data-attributes="member: 16296"><p>@ Novatech</p><p></p><p>My call would be on the feed and the calves. My put would be on the fat cattle. Neither of which the feedlot operator has anything to do with, that is done thru CME. </p><p></p><p>I have guaranteed myself a profit on 40,000 of cattle when I placed the call on the feed and calves and put on the fat cattle, if not I never should have paid the premiums. I know in advance of buying and selling everything exactly what I will spend on feed and calves and what I will recieve for income from fat cattle. </p><p></p><p>Now with those puts and calls I can always make more $$$$ but never less. The cash commodity will move relative to the futures. </p><p></p><p>Now I may end up with poor calves or a bad feedlot operator but that is no fault of the market. That is the rancher (poor calves) and feedlot operators (poor herdsmanship) fault. </p><p></p><p>A call is a certain amount of a commodity in a certain month. A put is just the same. </p><p>You are going to buy and sell a certain quantities in specified months regardless of futures or cash price, your price was set with the put and call.</p></blockquote><p></p>
[QUOTE="alohacattle, post: 846056, member: 16296"] @ Novatech My call would be on the feed and the calves. My put would be on the fat cattle. Neither of which the feedlot operator has anything to do with, that is done thru CME. I have guaranteed myself a profit on 40,000 of cattle when I placed the call on the feed and calves and put on the fat cattle, if not I never should have paid the premiums. I know in advance of buying and selling everything exactly what I will spend on feed and calves and what I will recieve for income from fat cattle. Now with those puts and calls I can always make more $$$$ but never less. The cash commodity will move relative to the futures. Now I may end up with poor calves or a bad feedlot operator but that is no fault of the market. That is the rancher (poor calves) and feedlot operators (poor herdsmanship) fault. A call is a certain amount of a commodity in a certain month. A put is just the same. You are going to buy and sell a certain quantities in specified months regardless of futures or cash price, your price was set with the put and call. [/QUOTE]
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