cocoa testing 3,000. I think we take it out and continue to charge higher.
OJ/ Coffee Random Musings
- Thread starter criveratrading
- Start date
YT looked at your 10/11/12 October Sugar Butterfly. Looks like a debit of 18 pts. My question though is with the underlying at 11.54 this spread looks biased to want the market to trail off as you are already pretty close to your upper breakeven zone.
Basically you are paying 18 pts to gain 100pts if sugar settles at 11 in 92 days. You breakeven at 11.82 and 10.18
What's your thought here?
Basically you are paying 18 pts to gain 100pts if sugar settles at 11 in 92 days. You breakeven at 11.82 and 10.18
What's your thought here?
One thought to hedge my 2800/2900 call spread in Sep Cocoa could be in fact to turn it into a Condor by selling the 3000/3100 Call spread.
If I paid 45.5 pts for the 2800/2900 and can sell the 3000/3100 spread for 40pts (settled there) then my net cost is 5.5 pts.
My profit zone is between 2900 & 3000 in Cocoa for a max gain of 100pts.
If I get lucky and can sell it for 45.5 pts, I'll have a free option with zero risk to make 100 pts if Cocoa stays between 2900 & 3000.
But I have a bullish bias and think it goes higher. So question is: Is it better to leave trade alone now that it is "in the money" but has til Aug 1st to expire, or does one adjust and hedge off the risk for a zero cost option and 100 pt profit range b/w 2900 and 3000?
If I paid 45.5 pts for the 2800/2900 and can sell the 3000/3100 spread for 40pts (settled there) then my net cost is 5.5 pts.
My profit zone is between 2900 & 3000 in Cocoa for a max gain of 100pts.
If I get lucky and can sell it for 45.5 pts, I'll have a free option with zero risk to make 100 pts if Cocoa stays between 2900 & 3000.
But I have a bullish bias and think it goes higher. So question is: Is it better to leave trade alone now that it is "in the money" but has til Aug 1st to expire, or does one adjust and hedge off the risk for a zero cost option and 100 pt profit range b/w 2900 and 3000?
Even better. sell the 3100/3200 Sep cocoa call spread at 30 pts, reduce net cost of strategy to 15.5 pts and have a profit range b/w 2900-3100
?
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crivera
The trade you are proposing is an iron butterfly right? I have looked into that kind of spread before but haven't been able to find out what the advantages/disadvantages are of using an iron fly compared to a regular fly.
However I do agree that placing a 4 trade spread like that will surely get you a poor fill (especially if a guy does any size at all). Thats the only problem with those illiquid markets........good opportunities but you have to overcome the local's spread too. I didn't even bother calling the floor on that trade (rape) but am thinking about putting on a 110/120 1x2 call spread. Selling the 120 with a vol of around 40 and buying the 110 with a vol of around 135 seems pretty good.......thoughts?
As far as the sugar fly goes.........I think I would rather selling the 10.50/11.50/12.50 oct fly instead of the one I previously mentioned.........vol is high but its not really high so I am still debating......however I do think sugar ranges for a while after this big drop so straddles/strangles or flies are the key in that market..........got july options exp today in sugar.........got a few 10.50 straddles I shorted at .72 so looking forward to exp.
Good Trading Guys
A
Hey YT
So with July expiring at 10.54 , looks like you're taking home 68 pts on your Sugar Straddle yes?
Did you close before expiration to avoid getting "pinned" on expiration and having a short futures position assigned to you at 10.5???
So with July expiring at 10.54 , looks like you're taking home 68 pts on your Sugar Straddle yes?
Did you close before expiration to avoid getting "pinned" on expiration and having a short futures position assigned to you at 10.5???
Criv my man hope all is well. I've been busy as hell with real estate not much time to chat on here. Anywho, Cocoa is looking good that 3000 is gonna get hit soon. It's just psychological, it has legs for possible 3100-3200 imho. coffee very rangebound, my bias is still short. Bought two oj's as lottery picks over the weekend. You guys see anything else? Have a great weekend!
Rtrader, everything is good. Yeah cocoa traded nicely and the COT today shows specs adding 4,000 odd of length and IMHO still have powder to run the market higher.
OJ has seemed quiet. I'm more neutral here and if anything would own cheap calls for a lotto trade, not sure if I'm in love with the futures here. Seems they want to bleed it a bit lower with lack of news.
In Cocoa I was looking at the structure of 2800/2900 call spreads at various maturities:
Aug is at 72 pts
Sep is at 62 pts
and successive months go down like 55, 50, 44,42, etc...
I guess what I'm wondering is; holding everything else equal and noting that the Cocoa curve is pretty flat i.e. not much contango/backwardation, what should be worth more? A far month spread or a near month spread. It seems that the more near the expiry, the more the spread is worth. I guess that b/c the spread is now ITM time value erodes faster in the near term and allows the spread to widen to its full potential.
Wonder if that's the same case with OTM spreads. Like 3200/3300's etc...
Any way to arb this?
OJ has seemed quiet. I'm more neutral here and if anything would own cheap calls for a lotto trade, not sure if I'm in love with the futures here. Seems they want to bleed it a bit lower with lack of news.
In Cocoa I was looking at the structure of 2800/2900 call spreads at various maturities:
Aug is at 72 pts
Sep is at 62 pts
and successive months go down like 55, 50, 44,42, etc...
I guess what I'm wondering is; holding everything else equal and noting that the Cocoa curve is pretty flat i.e. not much contango/backwardation, what should be worth more? A far month spread or a near month spread. It seems that the more near the expiry, the more the spread is worth. I guess that b/c the spread is now ITM time value erodes faster in the near term and allows the spread to widen to its full potential.
Wonder if that's the same case with OTM spreads. Like 3200/3300's etc...
Any way to arb this?
