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Meats

  #111 (permalink)
Hiraphor
London, UK
 
Posts: 35 since Apr 2021
Thanks Given: 12
Thanks Received: 36


myrrdin View Post
May and July contracts usually have very low volume; most people only trade the June contact. Thus, May and July contracts often are mispriced.

Best regards, Myrrdin

Here's the graph which I forgot to attach (the line is the current intraday price at the time of this post)! Will scale in a bit of long may short june long jul.


Screenshot 2022-03-14 at 15.40.23

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  #112 (permalink)
Hiraphor
London, UK
 
Posts: 35 since Apr 2021
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@myrrdin: I did some more looking around and I think you're right about liquidity. Earlier intraday the entire hog curve was red with June being the only green one - indicates speculator money piling into only the June contract and dislocating the curve. Also commitment of traders shows fairly high managed money levels in hogs - probably concentrated around the high open interest June contract, suggesting dislocation.

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  #113 (permalink)
 myrrdin 
Linz Austria
 
Experience: Advanced
Platform: TWS
Broker: Interactive Brokers
Trading: Commodities
Posts: 1,938 since Nov 2014
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Hiraphor View Post
@myrrdin: I did some more looking around and I think you're right about liquidity. Earlier intraday the entire hog curve was red with June being the only green one - indicates speculator money piling into only the June contract and dislocating the curve. Also commitment of traders shows fairly high managed money levels in hogs - probably concentrated around the high open interest June contract, suggesting dislocation.

Have a look at the open interest of the options:

HEK P100: 10 (!)
HEM P100: 3.730

I remember selling some HEK options many years ago. Even my broker had problems to get me out of this trade.

Best regards, Myrrdin

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  #114 (permalink)
Hiraphor
London, UK
 
Posts: 35 since Apr 2021
Thanks Given: 12
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myrrdin View Post
Have a look at the open interest of the options:

HEK P100: 10 (!)
HEM P100: 3.730

I remember selling some HEK options many years ago. Even my broker had problems to get me out of this trade.

Best regards, Myrrdin

At least it's cash settled. Otherwise you'd be eating pork for breakfast lunch and dinner for a good few years

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  #115 (permalink)
Hiraphor
London, UK
 
Posts: 35 since Apr 2021
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Does anyone have any idea of what happened in 2018 causing the May hog spread to expire at ~11? The butterfly seems not to have too much downside but still don't want to get burnt in these conditions (since the May spread is driving all the action).. Seems like June keeps getting bought and other contracts are left behind, but if speculators keep pushing money into one contract they can pump the market instead of having it correct.

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  #116 (permalink)
 myrrdin 
Linz Austria
 
Experience: Advanced
Platform: TWS
Broker: Interactive Brokers
Trading: Commodities
Posts: 1,938 since Nov 2014
Thanks Given: 3,688
Thanks Received: 2,651


Hiraphor View Post
Does anyone have any idea of what happened in 2018 causing the May hog spread to expire at ~11? The butterfly seems not to have too much downside but still don't want to get burnt in these conditions (since the May spread is driving all the action).. Seems like June keeps getting bought and other contracts are left behind, but if speculators keep pushing money into one contract they can pump the market instead of having it correct.

I do not trade the May contract any more because of the extremely low volume. Thus, I have no idea.

Best regards, Myrrdin

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Last Updated on March 15, 2022


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