Once a month, at random, Mr. Mound posts his Trade of
the Month on this page for all readers. Click
on the banner above to sign up to receive the Trade of the
Month via email each week. It's a free service; so don't wait
to sign up for this limited time offer.
If you want more trade recommendations from Mr. Mound, be
sure to visit the Mound Trade Signals Report
pages for unparalleled content and recommendations.
___ James Mound Trading Group ___
Toll Free: 1-888-744-8866 WWW.MOUNDREPORT.COM info@moundreport.com
MoundReport.com’s Trade of
the Month
March 25th, 2008
Live Cattle Long Strangle
Trade Description:
Buy one April Live Cattle 92 call
and buy one April Live Cattle 89 put for a total strangle price of 1.00 ($400)
or better. Using a typical JMTG
commission, total cost of trade* would be $490 ($400 entry cost plus $45 per
round turn in commissions and fees*)
Trade Explanation:
Cattle is setting up a technical breakout and is exposed to the
upcoming grain acreage report’s anticipated volatility. Positioning ahead of the report sets up a
potential price chop in the cattle market.
**Chart courtesy of Gecko Software’s TracknTrade
Risk Scenarios:
Max risk is the total cost of trade* and occurs at expiration with the market
between 92.00 and 89.00. Loss is reduced
at expiration by $40 per .10 above 92.00 to 93.25 (breakeven to the upside*) or
below 89.00 to 87.75 (breakeven to the downside*)
Profit Scenarios:
Max profit is theoretically
unlimited and occurs at expiration at $40 per .10 above 93.25 (breakeven to the
upside*) or below 87.75 (breakeven to the downside*). It is recommended that you have multiple
spreads to allow for a scale out exit of the winning side of the trade. Pull 50% of the winning side of the trade at
2.10 ($840), 25% at 3.10 ($1,240) and the rest as per your personal
aggressiveness. If the market whips back
the other way after the first scale out at 2.10 then look to pull half of that
side at 1.10 ($440) and the rest as per your personal aggressiveness.
*Disclaimer: There is risk of loss in
all commodities trading. Please consult a James Mound Trading Group
Broker before you trade for the first time. Losses can exceed your account
size and/or margin requirements. Commodities trading can be extremely
risky and is not for everyone. Some option strategies have unlimited
risk. Educate yourself on the risks and rewards of such investing prior
to trading. James Mound Trading Group, or anyone associated with JMTG or
moundreport.com, do not guarantee profits or pre-determined loss points,
and are not held monetarily responsible for the trading losses of others
(clients or otherwise). Past results are by no means indicative of potential
future returns. Information provided are
compiled by sources believed to be reliable. JMTG or its principals
assume no responsibility for any errors or omissions as the information may not
be complete or events may have been cancelled or rescheduled. Any copy,
reprint, broadcast or distribution of this report of any kind is prohibited
without the express written consent of James Mound Trading Group LLC. Total
cost, or cost/credit of trade (as referred to in the trade above), includes the
cost/credit of entry, commissions and fees. Typical commission is an
approximate mean of commission rates amongst JMTG customers, but can be more or
less depending upon the individual account/customer, services rendered, account
size, trading volume, etc. Commissions
at JMTG range from $3 to $27.50 per side depending upon the market traded and
specific commission rate charged to the client. Fees range from $2.88 to
$7.50 per side depending upon the market traded.
