There's some common theme's we're hearing on the phone's lately, right or wrong, but many are thinking the same.

• "Nothing's changed, fundamentals are still bullish"

• "If the board would ever put premium in the back months, I'd hedge a profit"

• "I can't buy LRP, they're too expensive"

I'm going to tell you my opinion on it, which is "The market is going to eventually get to a point we should've hedged small losses to avoid the big one." The problem is, even thinking that to be true, I/we don't know when that will be. So how do we fight it? Options or LRP's. "But they're too expensive" is the next thing I hear. What if you were willing to change your risk a little and trade options to hopefully offset the premium? Here's an example.

• Buy LRP on summer yearlings, maybe using Aug. 3rd at $342.76 costing $13.23

• If you're of the opinion we're not going to new highs, you might consider selling an August $380 call option, collecting $5

• And if you're also in the camp that feeders don't belong or won't go below $300, maybe you sell a $300 August put option, collecting another $5

If futures don't settle above $380 or below $300, you can use the $10/cwt you collected on the pair of sold options to put towards the $13.23/cwt LRP premium. If that actually happens, now your premium is $3.23/cwt to protect the market from $342.76 down to $300. Sometimes some protection is better than none. This takes the guessing game out of the equation. And if you happen to get burned on that sold $380 call option, you have the physical livestock making more than you thought they would, so that's still a win in my opinion.

If you're a finisher, hogs or cattle, this is a good way to protect cattle when margins are tight. Our goals here are to not only help you manage your market risks, but also to try making your operation as profitable as possible. Maybe your crop/livestock insurances could benefit from learning to trade options. Call us if this seemed like I'm speaking Greek. It's our job to educate and inform you, so take advantage of it.

-Fat cattle kill at 103,000 vs 102,000 a week ago and 114,000 a year ago

-Choice boxes up 4.07 to $391.29 and select 4.67 to $383.62 for a spread of 7.67 on 48 loads

-CME feeder index(Feeder LRP Settlement) for 3/6 came in at $366.39

-Fed Cattle LRP’s ending last week settled at $240.02

-Hog kill at 493,000 vs 475,000 a week ago and 486,000 a year ago.

-Afternoon Pork reported up 3.05 at $101.32 on 247 loads

-CME lean hog index on 3/5 reported at 90.74

-CME pork cutout index on 3/6 reported at 98.66

-LRP’s ending 3/9 settled at approximately $90.87

BRAZIL: Minas Gerais/Bahia to MG will see 3”-6”… Upgrade account to read the rest.