Windy City Trade Trade Tip Write 8000 Hog call

The hogs have flattened out after the huge rise from 7000 in early September to just shy of 8000 in mid October. Rather than shorting a futures contract I would suggest to sell short (write) the 8000 call option. We can take in 125 points or $500 at $4 per point and there are 43 days until expiration date of December 14. I do not believe they will push through very strong resistance at 8000 and are more likely to see a pull back to 7550 first. Margin is about $1200 for this trade.

The Trade:   Sell December 8000 Lean hog calls at 125 points or better.
Protection:   Exit option if futures close above 8050
Objective:     Futures below 8000 at expiration. Keep the $500 premium collected


Bill Frejlich
The PRICE Futures Group
Author of The Windy City Trader

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