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Live Cattle Futures Trading Basics
Live Cattle futures are standardized, exchange-traded contracts in which the contract buyer agrees to take delivery, from the seller, a specific quantity of live cattle (eg. 40000 pounds) at a predetermined price on a future delivery date.
Live Cattle Futures Exchanges
You can trade Live Cattle futures at Chicago Mercantile Exchange (CME).
CME Live Cattle futures prices are quoted in dollars and cents per pound and are traded in lot sizes of 40000 pounds (18 metric tons).
| Exchange & Product Name | Symbol | Contract Size | Initial Margin |
| CME Live Cattle Futures (Price Quotes) | LC | 40000 pounds (Full Contract Spec) | USD 1,620 (approx. 5%) (Latest Margin Info) |
Live Cattle Futures Trading
Consumers and producers of live cattle can manage live cattle price risk by purchasing and selling live cattle futures. Live Cattle producers can employ a short hedge to lock in a selling price for the live cattle they produce while businesses that require live cattle can utilize a long hedge to secure a purchase price for the commodity they need.
Live Cattle futures are also traded by speculators who assume the price risk that hedgers try to avoid in return for a chance to profit from favorable live cattle price movement. Speculators buy live cattle futures when they believe that live cattle prices will go up. Conversely, they will sell live cattle futures when they think that live cattle prices will fall.
Related Articles
- Buying Live Cattle Futures to Profit from a Rise in Live Cattle Prices
- Selling Live Cattle Futures to Profit from a Fall in Live Cattle Prices
- Live Cattle Options Basics
- Live Cattle Call Option Trading Basics
- Live Cattle Put Option Trading Basics
- Hedging Against Rising Live Cattle Prices with Live Cattle Futures
- Hedging Against Falling Live Cattle Prices with Live Cattle Futures
How to Start Trading Live Cattle Futures
To buy or sell live cattle futures, you need to open a trading account with a broker that handles futures trades. Most online brokerages out there only deal with stocks and stock options. Only a few such as optionsXpress lets you trade futures and futures options as well. optionsXpress also provide a virtual trading platform where beginners can try out futures and options trading in real market conditions without using real money.
