thinking about reshorting here soon we shall see
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OJ/ Coffee Random Musings
- Thread starter criveratrading
- Start date
a great day fellas (but I'm alive what day isn't) Coffee stays in this little range which is fine by me, no bad weather upcoming that I can see. Just a lot of rolling into Sep. Still like the short side. Still overbought and still hugging that upper B band. Lets see corns bigmove down gave me relief on my cattle spreads (I have 14 on and my average is like 5.50 maybe and it's trading at 7.50) do the math on that ouch! Anyways gonna add more on those copper spreads. Yuo guys see anything
Yep Rtrad, I'm a broker , institutional.
Good trading the range in the coffee. Might as well while the range holds. Hopefully your back month cattle will settle down.
YT - what was the bid/ask on that spread on the floor then?
How the rest of your positions looking?
Rtrad, yeah, I read up more, seems they can trade as principals against customer flow, but can only cross customer flow "in house" if they are based in Europe as the new regulations there, MIFID is what it's called, allows them to use internal liquidity to pair off trades.
So if Customer X has 1,000 corn to sell at 730 and Customer Y has 1,0000 corn to buy at 730.25 and the market is 729.75-730.5 they cross em , clip 1/4 and report the trade to the tape/exchange. At least, that's how I understand it.
Honestly, the only thing I looked at today was at MF stock. They derive 60% of their revenue from interest on customer deposits. So get this: 15bln of customer deposits, 6bln from institutionals makes 21bln odd of deposits. Yet they rack in 3bln /quarter in interest income, so 12bln per year.
So 12bln of interest income off 21 bln of customer deposits. Hmmm. Now let's say they are lucky and can clip 2% from their repo/reverse operations . That would mean that they would need 600bln of notional investment in O/N or short term repos right?
600bln versus 21bln in deposits makes MF levered about 30x.
If anyone else has any views or sees this another way let me know.
Bottom line, only 30% of their bizz is brokerage comm, whether cleared trades or just execution only comm. They are more of a giant balance sheet funding operation.
So here is what I'm thinking: Their net interest margin got squeezed big time with short rates dropping, so they decide to extend and buy longer term higher quality paper and thus extend duration risk. Customers panic, pull their money and since everything is tied up in a term repo they can't redeem customer outflows, panic ensues, etc.... That's why I think the stock is dropping like a stone.
1.4bln in a bridge facility to refinance. 300mm being backstopped by JC Flowers via a convert IF and only if they secure 750mm in add'l financing. I think they have 450mm in the works with a bank syndicate to refinance, so funding hole still 650mm, or so.
I have a long bias in this stock, but think we go lower, much lower b4 this works out.
yeah, well, guess this ain't much of a oj/coffee musing- but nothing else catching my eye.
Good trading the range in the coffee. Might as well while the range holds. Hopefully your back month cattle will settle down.
YT - what was the bid/ask on that spread on the floor then?
How the rest of your positions looking?
Rtrad, yeah, I read up more, seems they can trade as principals against customer flow, but can only cross customer flow "in house" if they are based in Europe as the new regulations there, MIFID is what it's called, allows them to use internal liquidity to pair off trades.
So if Customer X has 1,000 corn to sell at 730 and Customer Y has 1,0000 corn to buy at 730.25 and the market is 729.75-730.5 they cross em , clip 1/4 and report the trade to the tape/exchange. At least, that's how I understand it.
Honestly, the only thing I looked at today was at MF stock. They derive 60% of their revenue from interest on customer deposits. So get this: 15bln of customer deposits, 6bln from institutionals makes 21bln odd of deposits. Yet they rack in 3bln /quarter in interest income, so 12bln per year.
So 12bln of interest income off 21 bln of customer deposits. Hmmm. Now let's say they are lucky and can clip 2% from their repo/reverse operations . That would mean that they would need 600bln of notional investment in O/N or short term repos right?
600bln versus 21bln in deposits makes MF levered about 30x.
If anyone else has any views or sees this another way let me know.
Bottom line, only 30% of their bizz is brokerage comm, whether cleared trades or just execution only comm. They are more of a giant balance sheet funding operation.
So here is what I'm thinking: Their net interest margin got squeezed big time with short rates dropping, so they decide to extend and buy longer term higher quality paper and thus extend duration risk. Customers panic, pull their money and since everything is tied up in a term repo they can't redeem customer outflows, panic ensues, etc.... That's why I think the stock is dropping like a stone.
1.4bln in a bridge facility to refinance. 300mm being backstopped by JC Flowers via a convert IF and only if they secure 750mm in add'l financing. I think they have 450mm in the works with a bank syndicate to refinance, so funding hole still 650mm, or so.
I have a long bias in this stock, but think we go lower, much lower b4 this works out.
yeah, well, guess this ain't much of a oj/coffee musing- but nothing else catching my eye.
YT - I like your coffee put spread. 4x reward/risk. Settled at 240pts.
Question is: Do I have any edge/value added in saying Coffee breaks down?
Question is: Do I have any edge/value added in saying Coffee breaks down?
I got so drunk last night and tried to trade coffee thank god I got stopped out haha! I am just waking up (9:00 am) it's like the middle of the day for me. looks like everything is up. i'm on the sidelines today!
short twice at 142.70 also entering some more copper spreads. Levels this high with coffee are enticing to me from the short side. but it is making higher highs and higher lows and we all know what that means. I wanna see what deliveries look like. I can breathe a little better on that aug/oct spread, should a put more on at 7.80 and i'd be in good shape. Oh well c'est la vie. I feel awful today, I rarely go out anymore and I remember why on days like this.
How long have you been a broker for? Has the advent of everything electronic hurt you? Man I remember 35 a side commisions, can't believe we used to make money doing that haha!
I hope everybody has a great weekend, and I hope Brasil is nice and mild. No frosts or anything!
How long have you been a broker for? Has the advent of everything electronic hurt you? Man I remember 35 a side commisions, can't believe we used to make money doing that haha!
I hope everybody has a great weekend, and I hope Brasil is nice and mild. No frosts or anything!
haha you guys see that gap blew out my stops lol! Oh well can't do anything about it, w3as tempted to get short at 148.00
Quote from Rtrader2525:
I got so drunk last night and tried to trade coffee thank god I got stopped out haha! I am just waking up (9:00 am) it's like the middle of the day for me. looks like everything is up. i'm on the sidelines today!
September Coffee was one of my first trades yesterday (I'm a newbie). I had a buy stop at 14535 early in the morning. I didn't think it would get filled yesterday and right as I was about to get lunch, it filled and shortly after skyrocketed to 148. It freaked me out so much that I sold it then and there. Didn't think anything could move so fast.
Maybe I should start meditating again. Calm nerves seem to be something necessary for this sort of thing.
Quote from debra1970p:
September Coffee was one of my first trades yesterday (I'm a newbie). I had a buy stop at 14535 early in the morning. I didn't think it would get filled yesterday and right as I was about to get lunch, it filled and shortly after skyrocketed to 148. It freaked me out so much that I sold it then and there. Didn't think anything could move so fast.
Maybe I should start meditating again. Calm nerves seem to be something necessary for this sort of thing.
LOL its funny cause its true!!!! Congrats man on your first trade in coffee and picking up a few bucks. Its a wild market and is not for the faint of heart.
Speaking of coffee i'm getting kinda anxious to buy some put spreads in sep coffee here. All Friday was just stop running........when you get a trading range like that you know there is stops so locals just pushed for them. Remember huge brazilian crop that will be hitting the shelves within a months time.
Thinking about buying butterflies in sugar but nothing provides a real good R/R trade.
Okay, so coffee's a wild market? Maybe I'll stick to the calmer markets, if they exist.
I'm just fortunate that I was on the right side of that move yesterday.
I'm just fortunate that I was on the right side of that move yesterday.