Cattle prices are shooting up. In talking to Jim Bower of Bower Trading, he tells us that when you see any market trading vertically like these cattle markets are now, this is a time to use a marketing strategy that he doesn’t often recommend. That is the “put option.”
Put options are contracts between two parties (a buyer and a seller) whereby the buyer of the put options acquires the right but not the obligation to sell a specified stock or other underlying instrument at a specified price by a specified date.
Jim explained why, when the cattle markets are acting like they are now, a put option could be a good option.
While there are plenty of marketing choices out there, a lot of folks do stay with the familiar cash sale. If you’re interested to learning more about the possibilities, read Bower Trading’s “Futures 101.”