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3-leg Butterfly Lean Hogs Spread

I've got asked a few times about the 3-leg or butterfly spreads we have been trading in Traders Notebook and therefore I want to show you one of our latest trades. What you can see on the seasonal chart below is a butterfly Lean Hogs spread, long 2 contracts in July and short 1 contract in June and 1 short in August. We've entered the spread on June 30 at 0.0 (red arrow), we covered some contracts at 1.000 and we are still holding the last lot using a trailing stop.

How can you trade these type of spreads? The butterfly spread is trading like a single contract at the exchange and you can trade it the same way as a calendar spread. As you can see on the chart below, the chart is up-side-down and we had to sell the exchange traded contract (the exchange traded butterfly is HEM6-2*HEN6+HEQ6).

We've been trading these kind of spreads for a few months now in Traders Notebook and we are very successful with it.

Please get in contact with me whenever you have any questions.

 

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Sunday, 22 October 2017

Derivative transactions, including futures, are complex and carry a high degree of risk. They are intended for sophisticated investors and are not suitable for everyone. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, and all of which can adversely affect actual trading results. For more information, see the Risk Disclosure Statement for Futures and Options.