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For: Monday 07-19-2010

Hogs Hit Resistance

The lean hogs have rallied into the center of the old congestion area. This “value” area is easily seen on the merged market profile chart below also. Seasonally we should see a quick break into the end of July. As this market is cash settled the option trade a longer time and we should have a decent short term play. The futures are still at a premium to the lean index which the market is settled to at expiration.

Aggressive traders may opt to use futures. As always please consult your personal broker at Great Pacific Trading Company to see if this trade is suitable for your account.

Trade Recommendation: Buy the August 80-76 put spread and sell the August 86 call for a debit of 50 cents. Risk 120 points on the trade. (>$480 not including commissions and fees), Look to take profits if the market trades to 7700.