Coffee- JO

R

RichardRimes

didn't want to clutter up the CL trade with off topic however seems to be picked up interest in the coffee trade. I'm kinda looking at a long trade via short put and pulled up this chart.

Interesting trade this AM....over 900 June 22 call contracts traded on a low volume and low interest stock JO....

anyone else trading or interested in trading coffee?
 

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I'd be looking to fade a pull back on the daily chart. Market's rarely make V bottoms although it is possible coffee does. I don't see anything that makes me think it's a great long here.


Also, I don't trade the options but it seems to me like the Vols would be pretty low making selling puts pretty high risk? I'd be careful.
 
The IVs are quite low, with ATMs about 22%, so you're not getting paid much to sell puts.

Pull up a long term monthly chart that goes back to the late 1980s. I don't know a lot about TA, but call it the 'round number thing' or re-visiting previous support, resistance & congestion and $1.00 still looks like a magnet.

Current prices are below the cost of production, so they won't stay there forever, but on the same monthly chart, look at the 'coffee crisis' years of ~2001-2004. Coffee's not like corn, soybeans or wheat (annuals). It's a tree so even with reduced fertilizer and pesticide application for a year or two, it's still going to be produced and harvested.

¡Cuidado!
 
no actually vol's aren't bad, seriously doubt coffee will go do zero based on CD's (and everyone else's) coffee habits:)

I'm bummed that TOS isn't allowing option trading on the /KC because what I think I would do is long the KC and short the monthly call against it. Thats why just selling the put in JO is attractive. "poor man's" covered call. :)

Agree you seldom have V type recoveries but my guess is that AGGS are a bit different since there can be weather related supply disruptions etc.

Not daytrading here at anyrate...more of a swing trade with selling ATM puts on a monthly or quarterly rate.


just saw your contribution Brighton...thanks..
 
Quote from Brighton:

The IVs are quite low, with ATMs about 22%, so you're not getting paid much to sell puts.

Pull up a long term monthly chart that goes back to the late 1980s. I don't know a lot about TA, but call it the 'round number thing' or re-visiting previous support, resistance & congestion and $1.00 still looks like a magnet.

Current prices are below the cost of production, so they won't stay there forever, but on the same monthly chart, look at the 'coffee crisis' years of ~2001-2004. Coffee's not like corn, soybeans or wheat (annuals). It's a tree so even with reduced fertilizer and pesticide application for a year or two, it's still going to be produced and harvested.

¡Cuidado!
More...

/KO and JO don't go back that far. This is my 20 yr monthly which only goes back to mid 07...so based on that I would think KO has over shot to the downside.
 

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Sugar seems like it already has a confirmed bottom so you might want to check that out. I mentioned on the other thread I'm already long JO but I'm really liking the sugar more with the pull back over the last couple of weeks. I haven't done much research on the fundamentals of sugar but do you really need to with that ugly of a beat down.
 
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