No guarantees are being made to the content's accuracy or completeness. Hogs are typically bred twice a year in order to provide a steady flow of production. They are usually weaned by weeks of age and then fed grains such as oats, corn and wheat to fatten them.
Pigs typically gain 3. Hogs are usually ready for slaughter at about pounds and yield a dressed carcass weight of around pounds which yields about 89 pounds of lean meat.
Effective with the February contract, new and improved specifications, including a new name -Lean Hogs- instead of live hogs make this contract even a more viable hedging tool for pork producers and packers throughout the U. Are you a lean hog hedger? If so, click here to learn more. A lean hog 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. 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 lean hog option to hedge your price risk in the physical lean hog market maybe you are a producer and own a hog farm or you are an end user and own a chain of barbeque restaurants or you are speculating that lean hog prices will go higher in an attempt to make a profit. A lean hog 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 April lean hog.
This means that you have the right but not the obligation to sell 40, pounds of April lean hogs at. 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. 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 also assume that the lean hog 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. Please click here to see the most recent contract specifications and click here for the most recent trading hours.
Trading Unit Lean Hog Futures: One Lean Hogs Futures Contract. Trading Hours Lean Hog Futures: Trading Months Lean Hog Futures: Contract Listings Lean Hog Futures: Limits Lean Hog Futures: To learn more about the meat futures visit live cattle futures , feeder cattle futures and porkbelly futures.
Lean Hogs Options on Futures Contracts Explained A lean hog 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. What is the delta factor?
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