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Understanding “Cattle Futures”
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<blockquote data-quote="SBMF 2015" data-source="post: 1675901" data-attributes="member: 39695"><p>Futures are a tool for the big boys. They are usually based on 40,000lb contracts. You buy cattle on paper and sell on paper, but never deliver real cattle.</p><p>If I buy a load of feeder cattle, and I know it will take X dollars for them to break even I can buy a put to place a floor in my market. Around the time I deliver the cattle to the packers, I sell my put. Hopefully the difference between the live price and the put is profit.</p><p>That is the bare bones basics. </p><p>I think I have that right. Lol. It's been 20years since I studied this.</p></blockquote><p></p>
[QUOTE="SBMF 2015, post: 1675901, member: 39695"] Futures are a tool for the big boys. They are usually based on 40,000lb contracts. You buy cattle on paper and sell on paper, but never deliver real cattle. If I buy a load of feeder cattle, and I know it will take X dollars for them to break even I can buy a put to place a floor in my market. Around the time I deliver the cattle to the packers, I sell my put. Hopefully the difference between the live price and the put is profit. That is the bare bones basics. I think I have that right. Lol. It's been 20years since I studied this. [/QUOTE]
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