Coffee Traders' Forum - A Discussion about Coffee Futures Trading
Coffee Traders Discussion Forum
Options Review End of Day 4-9-18
*Early morning trading in Coffee options included 1,100 of the May 115 puts trading around 16-tics. A total of another 1,000 May 120 calls traded today as well as the volume Coffee options was concentrated in those two strikes. While Coffee options led ICE’s New York markets in volume, the trading wasn’t particularly interesting. Coffee sustained an early move up, it wasn’t able to extend through its typical average trading range (today’s range was 175-points) and spent most of the day flatlined around the 118.50 level (its weighted average price was 118.66). Sugar has experienced a serious lack of interest in its options contracts as of late and London Cocoa was today’s most active market in options when you include all of the Softs. Its 12,700 options contracts were well beyond Coffee’s 8,700. With expiration in Calendar Spread Options only four days away, today’s 10-point range in the May/July spread was quite a bit of a disappointment for owners of options. More than 25,000 May/July spreads traded but the spread was unable to make a significant move. In the Robusta CSO contract, the 1250 calls, shown below, was an excellent purchase compared to the May/July CSOs that have traded. I hope you were able to buy some.
*Highlighted Trades Today:
250 Jun18 117.50 puts vs 120.00Δ35 traded 1.87 19.80 IV.
100 Jun18/May18 120.00 put calendar vs sell May18 118.60Δ22 traded .70.
100 Jul18/May18 122.50 call calendar vs sell Jul18 120.65Δ44 buy May18 118.75Δ12 traded 3.30. 100 Jul18 125.00/135.00 call spread vs 120.25Δ20 traded 1.57.
300 Jul18 125.00/120.00 put spread vs 120.50Δ18 traded 3.20.
200 Jun18 120.00 calls vs 120.70Δ54 traded 3.40 20.10 IV. Paper bought.
600 Robusta 1-Month CSO Jul18/May18 0 call calendar traded 15 vs. -18 in K/N and 7 in N/U. 1250 Robusta Coffee 1-Month CSO - ICEU - May18 5 call traded 2 vs. -18/-17.
Although it was a positive day for Coffee prices, there was no follow through. With a significant open interest in the outrights waiting to be rolled, or less likely, liquidated, there is an opportunity for some movement this week. Option expiration is on Friday there are approximately 25,000 calls and puts outstanding between the 110 and 125 strikes. The substantial open interest in the May options series could go a long way towards reducing open interest. Consider that there are 10,000 in the money puts in the May contract outstanding as of the days close.
Tariff threats subsided and Stocks, Crude, Grains and Cotton all had significant rallies. This tune could go on for quite a while and I wonder if it will be a ploy to be resolved before the elections. It would be an excellent way to win some votes and solve a political and economic disaster. We’ll have to wait a while for the resolution of that issue.