What market should I shoot for?

[ollie]

Richard,
Cash markets need to work out relative to the board now that you are protecting a live option to buy your cattle that you can't deliver and need to purchase on the board and cover with a cash sale or you are out the difference !Example: Texan buys my option for 1200 at a strike price of 94 . Cattle go to 98 on the board.Texan exorcises my option that I sold him. My cattle will only bring 94 live in Texas and they have got to come out of the feedlot and onto the kill floor or face more Y4 discounts. That is a 4 cent disparity .

 

[ManyHorses]

Olllie,

Similar to what I said in my 12/22 example...

The Call buyers breakeven is 94 cents - 91 cents contract price plus his 3 cent premium paid to you. If futures price approached 91, you'd probably buy back the 91 Call and resell a 92 or higher Call to keep following the market upwards... Ultimately with good management, the market would top out and you'd be able to keep the premium and still have your cattle to sell at maximum price locally.

If the market approached your strike, you wouldn't set there and let the market run over you... You'd buy back your Call and move it up out of danger enough to eventually get to keep the Call premium paid to you.

Now with the Call premium nailed down at expiration, you will either have made or lost money locally... most likely with that kind of market move you would have made money... That plus the Call premium paid to you became your real selling price.

If the market went down from its original position you were protected for the first 3 cents to the downside... your breakeven would have been the local cash price at the time less the 3 cents premium kept by you.

You'll find I'm always about MANAGING RISK AND NEVER ABOUT SPECULATION... You have to continue managing that Call after you establish it.

If you don't, you'll be like Custer's calvary shooting their horses, and staked to a ground position the Indians ran all over them... :???:

Richard

 

[ollie]

Olllie,

Similar to what I said in my 12/22 example...

The Call buyers breakeven is 94 cents - 91 cents contract price plus his 3 cent premium paid to you. If futures price approached 91, you'd probably buy back the 91 Call and resell a 92 or higher Call to keep following the market upwards... Ultimately with good management, the market would top out and you'd be able to keep the premium and still have your cattle to sell at maximum price locally.

If the market approached your strike, you wouldn't set there and let the market run over you... You'd buy back your Call and move it up out of danger enough to eventually get to keep the Call premium paid to you.

Now with the Call premium nailed down at expiration, you will either have made or lost money locally... most likely with that kind of market move you would have made money... That plus the Call premium paid to you became your real selling price.

If the market went down from its original position you were protected for the first 3 cents to the downside... your breakeven would have been the local cash price at the time less the 3 cents premium kept by you.

You'll find I'm always about MANAGING RISK AND NEVER ABOUT SPECULATION... You have to continue managing that Call after you establish it.

If you don't, you'll be like Custer's calvary shooting their horses, and staked to a ground position the Indians ran all over them... :???:

Richard

Richard , Two questions if I may: 1 does buying back my call cost money. 2) If the Jan board is my hedge and the cattle are ready and have got to get out of the lot asap but I want to manage my risk as you say what should I do.
I can sell a call for .675 at 92
They are currently biddding 89.65 on my cattle in the panhandle of Texas
Lets say that I have to get out the first week on Jan. to manage the y4"s
Last trade on the live cattle current mo. was 91.70
I sell the 92$ call which nets me 270.00
New market reports come out and the board and cash cattle go up 4.00 next week.
What would I do?
http://www.ams.usda.gov/LSMNpubs/PDF_Daily/DCBS.pdf

 

[ollie]

Richard you remind me of epd's ... If you ask a partial question you have all the answers. If you ask a question inclusive of the whole situation you have no answers , only more problems. Good luck in your cattle business and when you learn the production side of the equasion or want to learn come back and visit us.

 

[Campground Cattle]

Richard you remind me of epd's ... If you ask a partial question you have all the answers. If you ask a question inclusive of the whole situation you have no answers , only more problems. Good luck in your cattle business and when you learn the production side of the equasion or want to learn come back and visit us.

Ollie I agree with you the guy was smoke and mirrors. There are some really intelligent cattlemen on this board ,to many to name that are very knowledgeable for different regions of the country. As brokenmouth stated blew in here like we were all to stupid to be in the business.

 

[ManyHorses]

brokenmouth...

I've been trying hard to avoid you, but being your ingorance and illiteracy is everwhere, so I'll just have to shovel you up one more time....

Last time I looked:

Your cattle were down about 6 cents for a $3,000.00 loss
My March 102 was up from $1,887.50 to $3,562.50 for $1,675.00 gross profit less commissions to move the 97's down

Now while you're sloggin' though your cows***... I'm going back to playing golf in sunny Phoenix, AZ with some of your money.

Happy New Year brokenmouth... Richard

Happy New Year to all of you too... Richard

 

[Utah]

I think some of you out there have been VERY rude to Richard.

I'w new and I dont know hardly anything about raising cattle, but I do know something about people and about the financial markets. There are some of you here that are so prideful and arrogant that you could never take any advice from anyone - even if it made you more money. You all just jump to the conclusion that someone is calling you stupid or is claiming that they know more than you do about this or that.

What Richard has done is offer some experience to the readers of this board that they could NEVER get on their own. Information that can be used to make a better living, be more profitable, make more money. Who cares if he doesn't have as many years on the "production" side.

I'll say this too, I have paid a lot of money to read books and attend seminars from people like Richard that have real knowledge and experience about managing financial risk.

Richard, I enjoyed reading your posts on your option/future strategies. Please keep your posts coming.

I'm sure I'll be put in my place for being a newbie here and saying anything at all.

 

[catl]

Utah,By any chance are you Richards mama?

I think some of you out there have been VERY rude to Richard.

I'w new and I dont know hardly anything about raising cattle, but I do know something about people and about the financial markets. There are some of you here that are so prideful and arrogant that you could never take any advice from anyone - even if it made you more money. You all just jump to the conclusion that someone is calling you stupid or is claiming that they know more than you do about this or that.

What Richard has done is offer some experience to the readers of this board that they could NEVER get on their own. Information that can be used to make a better living, be more profitable, make more money. Who cares if he doesn't have as many years on the "production" side.

I'll say this too, I have paid a lot of money to read books and attend seminars from people like Richard that have real knowledge and experience about managing financial risk.

Richard, I enjoyed reading your posts on your option/future strategies. Please keep your posts coming.

I'm sure I'll be put in my place for being a newbie here and saying anything at all.

 

[Utah]

Hey "catl," That was a clever reply!

 

[catl]

;-)

 

[ManyHorses]

catl,

You texass boyz and girlz aren't worth spit!

I'm going back to tradin' and sellin' down your cattle... What takes you months to produce I can trade off my keyboard in just a couple minutes... with a lot less risk and effort.

Keep strokin' your bramers... Richard

 

[ollie]

Come back and visit sometime Richard and let us know how your golf game is . Maybe you can teach us some more then.

 

[brokenmouth]

why just Texas youve managed to make an enemy out of good folks from all over the country. And whats all this boyz and girlz talk about. on top of being a lawyer and author and golfer and financial whiz it sounds like youre a gangsta rappa now. say homeboy keep subsidizing the markets with your cash it will put less downward pressure on us real ranchers and tell all your homies back in the hood we said howdy! ROFLMAO

 

[catl]

Not speaking for any Texas Boys or Girls other than myself but i don't really set much store in what you have to say.Hope you stay out of Texas. KEEP MILKIN' YOUR SUCKERS ... catl

catl,

You texass boyz and girlz aren't worth spit!

I'm going back to tradin' and sellin' down your cattle... What takes you months to produce I can trade off my keyboard in just a couple minutes... with a lot less risk and effort.

Keep strokin' your bramers... Richard

[/quote]

 

[ManyHorses]

brokenmouth...

Two questions...

Why don't you post a picture of yourself?
Why don't you identify where you're from?

Maybe you really are as ugly as you come across to people.

Members need to know more about what's behind that 'brokenmouth' of yours.

For someone who only has 15 head of cattle you sure shoot your 'brokenmouth' off a lot!

Richard

 

[dun]

I would assume that the brokenmouth is a reference to age, i.e. short and solid, broken mouth.

dun

 

[D.R. Cattle]

Starting to wonder if it's really broken record instead.

 

[brokenmouth]

I would assume that the brokenmouth is a reference to age, i.e. short and solid, broken mouth.

dun

yep. he doesnt get it

 

[brokenmouth]

brokenmouth... Two questions...

Why don't you post a picture of yourself?

hey now this aint that kind of board and besides im straight

Why don't you identify where you're from?

sure ill get right on that would you like my credit card numbers too