SpreadEdge Capital specializes in seasonal spread trading across a wide variety of commodity markets. A spread trade is the simultaneous purchase and sale of the same commodity with different delivery dates.  SpreadEdge publishes a weekly Newsletter that provides several seasonal spread trade opportunities every week.

Watch List
The SpreadEdge Newsletter includes a “Watch List” of trades that meet our strict screening criteria.  Included in the Watch List are the markets, commodity symbols, entry and exit dates, win %, average profit, average drawdown, best profit, worst loss, and risk level (using a 1-5 scale).  All information is hypothetical and is based on the most recent 15 years of historical data.

This week there are 2 trades on the Watch List that are planned for client and personal accounts.  This video will focus on the short Live Cattle spread.

Technical Analysis

Live Cattle has been in an extended uptrend since April of 2020 and accelerated to a steeper uptrend in May of 2023.  Over the past several weeks Live Cattle has broken the steeper more recent uptrend and is currently challenging the longer-term trend.  This support may hold for now but over the next weeks or months I expect this trend to also be broken.   

Spread Charts
Spread Charts represent the difference between the front and back month contracts and are simply the front month price minus the back month price.  Spreads that are sold profit when the price gets more negative or less positive.  Spreads that are bought profit when prices get more positive or less negative.

Back in early October, I recommended a Feeder Cattle calendar spread that has worked out nicely and currently has a $2,176 profit.

• Feeder Cattle and Live Cattle have an 83% correlation to each other, and I do not want too much exposure to these markets.
• I currently have 2 Feeder Cattle trades open, and each have a nice profit. Taking profits on 1 to open the Live Cattle trade keeps overall exposure in check.
• Switching the Mar, May Feeder Cattle spread for the Oct, Dec Live Cattle spread reduces overall volatility and risk by shifting out on the expiration calendar by 7 months.
   

Videos

For a video of this trade.

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BTW, for more information on spread charts, my website “SpreadEdgeCapital.com” has a video entitled “Anatomy of a spread trade".

More Information

The SpreadEdge Weekly Newsletter is published every weekend and provides a broad overview of the important seasonal, technical, and fundamental indicators within the Energy, Grains, Meats, Softs, Metals and Currency markets.  In addition, spread trade recommendations and follow-up on open trades is also provided.  For a free copy of the Weekly Newsletter, please send an email to info@SpreadEdgeCapital.com

Darren Carlat

SpreadEdge Capital, LLC

(214) 636-3133

Darren@SpreadEdgeCapital.com

www.SpreadEdgeCapital.com

Disclaimer

SpreadEdge Capital, LLC is registered as a Commodity Trading Advisor with the Commodity Futures Trading Commission and is an NFA member. Past performance is not indicative of future results. Futures trading is not suitable for all investors, The risk associated with futures trading is substantial. Only risk capital should be used for these investments because you can lose more than your original investment. This is not a solicitation.