Grain Spreads: Commercial Hedge Spreads
August 18,2025
Commercial Hedge Spreads
We are looking for good risk to reward ratios using option spreads for low cost to entry, for the goal of catching bigger protracted moves in the underlying futures in our opinion. “The discussion of potential maximum profit does not imply the probable outcome of these trades.” The risk is the price paid for the call or put spreads plus all commissions and fees.
Please join me for a free grain webinar every Thursday at 3pmm Central. We discuss supply, demand, weather, and the charts. Sign Up Now
Bullish Strategies
Soymeal-Trade Deals. Funds Record Short
Buy the July 2026 350 call. Sell the July 26 400 call. Pay 4 points or $400 per call spread plus commissions and fees. Maximum value at options expiration (6/26/26) if both strikes finish in the money is 5K, less trade costs and fees.
Buy the July 26 Chicago wheat 6.50/7.50 call spread for 7 cents or $350.00 plus trade costs and fees. Maximum value at options expiration (6/26/26) if both strikes finish in the money is 5K, less trade costs and fees.
Live Cattle Scarcity
Buy the February 2026 Live Cattle 250 Call. Sell the February 2026 260 Call. Pay 1.85 points for the put spread or $740 plus commissions and fees. Maximum value at options expiration (2/6/26) if both strikes finish in the money is $4,000.00 minus trade costs and fees.
Feeder Cattle Scarcity
Buy Sept 2025, 350/360, Call spread at 3.00. Maximum cost and risk is $1,500 plus commissions and fees. This has no margin risk. Maximum value at option expiration (9/25/2025) if both options expire in the money is $5,000 less your trade costs and fees.
Bullish with unlimited margin risk –Buy September 350 call and Sell September 345 Put for even money. Margin requirement for this risk reversal is $4,500. Projecting a move to 360.000, Maximum value of the Call at option expiration (9/25/2025) would be $5,000, the Put would expire worthless and you’ll keep the premium collected, less your trade cost and fees.
Natural Gas
Buy the June 26, 5.00/6.00, call spread for 5 points or $500 plus commissions and fees. Maximum value at options expiration (5/26/26) is 10K minus trade costs and fees.
Bearish Strategies
Gold/Silver-Economic certainties/trade deals
Gold-Buy the January 2026 Gold 3000 put and sell the 2900 put. Pay 4.00 or $400 plus trade costs and fees. The maximum profit at option expiration (9/25/25) if both strikes finish in the money is 10K, less trade costs and fees.
Buy the January 2026 Silver 31.00 put and sell the March 26 Silver 28.00 put for 6 points or $300 maximum risk plus commissions and fees. Maximum value at options expiration (2/24/26) if both strikes finish in the money is 10K, less trade costs and fees. Place an objective at 30 points GTC to exit for a 24-cent gain or $1200 less commissions and fees.
Livestock Hedges
Buy the October Live Cattle 220 Put. Sell the October Live Cattle 210 Put. Pay 1.20 points for the put spread or $480 plus commissions and fees. Maximum value at options expiration (10/3/25) if both strikes finish in the money is $4,000.00 minus trade costs and fees.
Buy the January Feeder Cattle 2026 310/280 put spread for $1750 plus trade costs and fees. Maximum value at options expiration (1/29/26) is 15K less trade costs and fees.
Buy the November Lean Hogs 80 vs 70 put spread for 150 points or $600 plus trade costs and fees. Maximum value at options expiration (11/14/25) is 4K less trade costs and fees.
If you would like to receive more information on the commodity markets, please use the link to join our email list Sign Up Now
Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
312 957 8103
888 391 7894 toll free
312 256 0109 fax
Walsh Trading
311 S Wacker Drive Suite 540
Chicago, Il 60606
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices.PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.