Here is a recap of the “Data Feed Trade” from December 2020.
The “Data Feed Trade” is a strategy to collect premium once a month to offset your monthly exchange data fees. You can read all of the details of this strategy in the following article.
The February 2021 Live Cattle futures contract price action was choppy, trading within a range of approximately 111.000 and 116.500 going back to the summer months. There was one severe price decline in October in which the contract traded down to a previous support level near 106.000. In early December, the contract dipped down near the 200-day Moving Average (110.250) before turning up. The trend and momentum indicators at that time both turned up as well. To cover the data fees for the month a December a put option was sold to collect premium. The 102.000 put was well below the October sell-off and offered sufficient premium to cover the data fees.
Trend and Momentum: Turning bullish
Market Strategy: Write a put option to collect premium well below the current market price and support levels.
Recommendation: Sold the February 2021 Live Cattle 102 put at 62.5 points or $250. On a fill, placed a liquidation order on 7.5 points to profit of $220.
After selling the option, the February 2021 futures contract price action continued higher to the top of the range and then sideways within the same trading range throughout December and January. As the expiration date of February 5 approached the option value diminished. The option was liquidated on January 21 on 7.5 points for a profit of $220.
Subscribe to the “Data Feed Trade” service to follow a strategy that will collect premium to cover your monthly data exchange data fees. The cost of this service is $19.99 per month and factored into the premium collected, so your service fees are covered as well!
February 2021 Live Cattle Chart from Bar Chart: