Feeder Cattle Futures and Options
*The information contained within this webpage comes from sources
believed to be reliable. No guarantees are being made to the
content's accuracy or completeness.
The Beef Cycle
The beef cycle typically begins when ranchers breed their cattle in the
summer which produces calves in the spring. The gestation period is 9 months.
These calves are weaned from the mother after 6-8 months and are moved to a
stocker operation where they spend 6-10 months and grow to near full size. When
they reach 650-849 pounds they are typically sent to a feedlot and become feeder
cattle. The animals are considered to have reached full weight at and are ready
for slaughter at around 1200 pounds.
Many people do not understand the difference between
feeder cattle futures and live cattle futures
As mentioned above, feeder cattle refers to the young animals that weigh from 650 pounds to 849
pounds that are sent to feedlots for
finishing into "fed" cattle, the basis of
Chicago Mercantile Exchange's (CME) Live
Cattle contracts take into account the total herd. CME added Feeder Cattle futures to
its list of livestock products in 1971, and in 1987
the Exchange added options on this contract. Learn More >>
Feeder Cattle Futures and Options Quick Facts
50,000 pound contract size
each one cent move equals $500
Trades all months but Feb., June,
Feeder cattle futures symbol (FC)
Here is the brochure courtesy of the CME group for cattle
futures and options.
Feeder cattle futures and options
have enabled cattle producers who use
them to manage their price risk more effectively.
Over the years, the contract has continually evolved
to more effectively serve both long and short
hedgers. Today the CME's feeder cattle future
contract and the live cattle future contract have
increased their volume considerably over the years
to become two of the premiere meat future contracts.
Are you a
feeder cattle hedger? If so,
click here to learn more.
Feeder Cattle Options on Futures Contracts Explained
A feeder cattle call option gives the purchaser the
right but not the obligation to purchase the underlying futures
contract for a specific time period and a specific price (strike
price). Let's say that you wanted to purchase a August Feeder Cattle
$2.00 call option and pay a premium of $1,300.
This means that you bought the right but not the obligation to buy
50,000 pounds of August feeder cattle for $2.00 a pound. Of course,
very few options are bought for the purpose of taking delivery but
that is one potential outcome. Chances are that you either bought
the feeder cattle option to hedge your price risk in the physical
feeder cattle market (you may be a producer like a rancher or a
consumer like a restaurant chain) or you are speculating that feeder
cattle prices will go higher in an attempt to make a profit.
A feeder cattle put option gives the purchaser the
right but not the obligation to sell the underlying futures contract
for a specific time period and a specific price. Let's say that you
wanted to buy an August feeder cattle $1.90 put option and pay a
premium of $1,475.
This means that you have the right but not the obligation to sell
50,000 pounds of August feeder cattle at $1.90 per pound.
What is the delta factor?
The delta factor of an option represents the estimated percentage of
change an option will receive based on the movements in the
underlying futures contract.
Let's assume the August feeder cattle $2.00 call option above has a
30% delta factor. This means that if the underlying futures contract
were to rally by $1,000, then the call option would accrue by
approximately $300 or 30% of $1,000 in the feeder cattle futures
What is theta?
Options are wasting assets which means that they lose value as time
passes. The theta of an option is the measure of time decay.
Let's assume that you bought an August feeder cattle $2.00 call
option with 60 days left until expiration. Let's also assume that
the feeder cattle futures prices have moved very little over the
last month and are exactly the same price 30 days later. Your option
will have lost 30 days worth of time and therefore will be worth
less today that it was when it had 60 days left until expiration.
Vega is a measure of the implied volatility of
an option contract as it relates to its underlying futures contract.
For instance, if the underlying futures contract is extremely
volatile then the implied volatility of the options of that futures
contract will be affected.
In a high implied volatility environment option
premiums tend to expand. Conversely, in a low implied volatility
environment the option premiums tend to decrease.
*Contract information changes from time to time. Please
click here to see the most recent contract
specifications and click here for the
most recent trading hours.
Feeder Cattle Futures and Feeder Cattle Options
Feeder Cattle Futures: 50,000 lbs. of 700 to 849 lb.
Medium Frame #1 and Medium and Large Frame #1 feeder
Feeder Cattle Options: One Feeder Cattle Futures
Live Cattle Futures: 40,000 lbs. of 55% choice, 45%
select grade live steers
Live Cattle Options: One Live Cattle Futures
Futures: 9:05 a.m. - 1:00 p.m. LTD (12:00p.m.) Central Time
Options: 9:05 a.m. - 1:02 p.m. LTD (12:00p.m.) Central Time
Feeder Cattle Futures: Jan, Mar, Apr, May, Aug,
Sept, Oct, and Nov, Eight months listed at a time
Live Cattle Futures: Feb, Apr, Jun, Aug, Oct, Dec,
Seven months in the February Bi-monthly Cycle
Feeder Cattle Options: Jan, Mar, Apr, May, Aug, Sep,
Flex Options: Eight options months listed
Live Cattle Options: Feb, Apr, Jun, Aug, Oct, Dec,
Flex Options: Six months in Feb Bi-monthly cycle.
One serial month
Feeder Futures and Options: 1 point = $.0001 per
pound = $5.00
Live Cattle Futures and Options: 1 point = $.0001
per pound = $4.00
Minimum Price Fluctuation
Feeder Cattle Futures and Options-regular: 0.00025 =
Live Cattle Futures and Options-regular: 0.00025 =
Feeder Cattle Options-cab: 0.000125 = $6.25
Live Cattle Options-cab: 0.000125 = $5.00
Options Strike Prices
Feeder Cattle Options: Cents per pound. First two
months only- $0.01 intervals, $0.60, $0.61, $062
etc. All other months- $0.02 intervals, $0.62,
$0.64, $0.66, etc.
for spot month, $0.005 intervals, $0.605, $0.610,
Flex Options are listed in intervals of $0.0025
Live Cattle Options: Cents per pound. First two
months only- $0.01 intervals e.g. $0.76, $0.77,
$0.78. All other months $0.02 intervals e.g. $0.76,
Serial Options - $0.01 intervals. Flex Options are
listed in intervals of $0.0025.
Live Cattle Futures Symbol: LC
Feeder Cattle Futures Symbol: FC
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To learn about other meat futures visit
live cattle futures,
lean hog futures and