Shorting Lean Hog Futures with a Put Option

We have been watching Lean Hog Futures (see our previous post: Lean Hog Futures Form 1-2-3 Top Formation?) and today, prices dipped below the #2 point of 123.00, going as low as 121.90 (June contract) before bouncing back up to currently ~124.00.

Since we’ve been planning to short this market when the above event occurred, we bought a June Lean Hogs Put option with a strike price of 1200 (2 strike prices out of the money) for $1040.00.  This option expires on June 17th, 2014.  Our target is the 50% Retracement Level of 115.50 on the Daily chart (see previous post).

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