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Trading Idea: GFJ17+ZCK17-2xLEQ17

 

Today I am looking at a very “strange” butterfly spread: Long 1 April Feeder Cattle and one May Corn and short 2 Live Cattle August. I have to admit that it is difficult to find an entry into this trade by looking for chart patterns but it is easy to see the possible support around the current level. OK, the spread moved a bit lower in July last year but this happened when there was not enough volume in all 3 legs of the spread. Since then the spread stayed above -$500 on a close basis. Unfortunately, there is no way to trade this spread as a single contract and we need to “leg in” into each leg separately. I would also give this spread enough room to develop and therefore a risk of about $1,000 - $1,500 per butterfly seems to be necessary.

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Tuesday, 12 December 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.