• Market:  April 2007 Lean Hogs (LHJ7)
• Tick value: 1 point = $4.00
• Option Expiration: 04/18/07   
• Trade Description: Bull call spread
• Max Risk: $400
• Max Profit: $1200
• Risk reward ratio:  3:1

Buy one April 2007 Lean Hogs 68 call while selling one April 2007 Lean Hogs 72 call for a combined cost and risk of 100 points ($400) or less to open a position.

Technical / Fundamental Explanation
The Hog market has been steadily rallying for the last few months. We have recently tested and supported out above the rising trendline support line on the chart below. This rising trend is expected to continue and a move into the 70's is the target for the next leg up.

Profit Goal
Max profit, assuming a 100 point fill, is 300 points ($1200) and occurs with Lean hogs trading anywhere above 72.00 at expiration. Break even point is 69.00.

Risk Analysis
Max risk, before commissions and fees, and assuming a 100 point fill, is $400. This occurs at expiration with Lean hogs trading below 68.00.

Derek Frey is Head Trader at Odom & Frey Futures & Options.

Risk Disclaimer
Past performance is not indicative of future results. Trading futures and options is not suitable for everyone. There is a substantial risk of loss in trading futures and options.