I'll throw my 2 cents in here too because with cattle prices the way they are I have spent alot of time figuring out how we should be taking advantage of the situation, and this is what I've learned.
Like everyone else, I have been looking at a way to give us a floor price while leaving the top open.  We have sold cash and contract cattle but have never done anything on the board.  So with the help of agtalk I did some researching, which wasn't too hard cause this is a pretty popular topic lately!  I found a fat cattle marketing study (sorry, I can't remember where I found it to link it here, so just going off memory...) that looked at a comparison of cash only, contracted only, hedging and the actual returns over multiple years.  The study showed that strictly cash marketing had the highest returns, but also the highest volatility.  Contracted only and hedging both produced similar returns but both decreased the volatility.

I have also had a chance to talk with someone who spent years trading options on the floor in Chicago.  His advice was don't use options as hedge against actual production.  He said the price of the option is based on expected volatility (among other things), so like others have said, when the probability of the price changing much is low, so are the price of options.  His advice was to forward contract or sell cash and STAY CONSISTENT.  Forward contracting may be leaving money on the table on the way up, but it will be taking a higher price on the way down.  Flipping between strategies is basically trying to outguess the market.  His opinion was the only place options showed returns were deep in the money.  He also said that if we felt the need for catastrophic insurance far out of the money puts would provide some protection against a black swan type crash, like what garvo is doing.

Are options a 1 to 1 return for a drop in the market?  Maybe I don't completely understand how their priced, but if volatility and time are taken into account when developing a price, the movement of the market can only be part of the equation.  If price starts at $150 and trends lower with little volatility, will an $140 strike put be worth $10 at expiration if the board price is $140?  

For us, I think we will stay out of the options market and continue to contract a percentage and sell the rest cash.  We sell cattle throughout the year, so averaging cash sales is easier than those that sell one or two months a year.