SPECIAL REPORT | Seasonal Live Cattle Trade
Posted: Nov. 23, 2022, 12:29 p.m.
Seasonal Trend Alert: April Live Cattle
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Below is a chart of the 5, 15, and 30 year average price fluctuation for April Live Cattle futures. We've listed 3 Ways to Play at the end of this writeup. |
Performance Snapshot |
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Below is a performance snapshot of the seasonal trend for each of the last 15 years. You can find the average gain/loss, best/worst equity (based on one futures contract), and more. |
The Technical Landscape
Below we are seeing a chart pattern that is referred to as a rising (ascending) wedge. It sounds bullish, but it is often viewed as a potential reversal pattern. With that said, higher highs and higher lows have been the trend since summer, which in our opinion sets up a well-defined downside risk range. A failure at 156.00-156.35 would neutralize our bias. This area represents the lower end of the risk range, the November lows, and the 200-day moving average (yellow line on chart).
3 Ways to Play
Here are three ways to consider playing this bullish seasonal trend:
1. Buy a call spread or outright call. For clients who are looking for way to play this seasonal trend with limited risk, we see value in the 158/163 call spread for 2.00 or better ($800). This trade would limit the upside. If you wanted to keep the upside open and risk the same amount of money, you could look at the 162 call for 2.00 or better. Contact our trade desk if you'd like to place this trade or get more information: 312-278-0500.
2. Buy a future(s) with a stop loss. Deciding where to buy and where to place the stop will vary from trader to trader, as each have a different risk profile and risk tolerance.
3. Use more complex options strategies. If you're curious about other ways to get exposure via different options strategies, contact our trade desk: 312-278-0500 or email Seasonals@BlueLineFutures.com
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