August 28, 2012 Update: Still Holding Position In December 2012 Coffee

 

 

 

Even though December 2012 Coffee prices have moved a bit higher this week, I am still holding my position in this market which is holding a December 2012 Coffee 140 put option. For one thing, the trade is still within my risk perimeters. Also, this market seems to have encountered some resistance at the 168 cent level. Finally, this market seems to be drifting with the light volumn of this pre-Labor Day week. With more trading volumn coming back into the market next week, I will be looking for this market to test and even break through support at the 160 cent level. If that happens, then I believe that there will be a good chance for the market to move to my target of 153.30 cents.

October 2012 Sugar

 

 

As of May 4, 2012, according to Elliott Wave projections, October 2012 Sugar was entering into a Wave 3 of a 5 wave move to the downside. On a close below the October 2012 contract low of 21.11, on May 4, 2012, I bought one October 2012 19 put option for 47 points or $526.40. The October 2012 options had an expiration of September 17, 2012, which was 136 days as of May 4, 2012. On June 19, 2012 I sold the October 2012 Sugar 19 put for 50 points for a profit of $33.60 before commissions.

The market moved down nicely after I entered the trade. October Sugar moved down to support at the 19 cent level and at that point my option had a profit of $548.80. My problem with this trade is that I did not have a specific target for taking profits. I was hoping that the market would fall further and that my option would go into the money. However, prices bounced back to the upside after hitting support at the 19 cent level and then the market began a lengthy correction. Soon most of my profit was gone. In retrospect, I would have been better off taking profits when the market hit support at 19 cents.

I  have posted the results of a trade I recently completed in August 2012 Soybeans. The trade involved selling one August 2012 Soybean 17 call option. Go to My Learn 2 Trade for details.

Here's an update on my December 2012 Coffee trade. Go To MyLearn2Trade for details.

December 2012 Coffee Chart Gives a Signal To Short The Market.

The overall chart for December 2012 Coffee continues to look bearish. Since putting in a high at 285.65 cents per pound on May 1, 2011, this market has sold off dramatically, reaching a low of 153.70 on June 18, 2012. Since mid-June, this market has been in a corrective wave up. Now, with the market on Thursday, August 9, 2012 closing below support at 170, it appears that this market has resumed its main trend which is down. This market could possibly move all the way down to the support around the 130 area.

On Friday, June 10, 2012, I placed an open order to buy one December Coffee 140 put option at 120 points or $450 (1 point equls $3.75 in Coffee). My open order was filled on June 10 at 115 points or
$431.25.  My objective is to sell the option if the market moves down to the next major support level at 153.30 cents.






Soybean Oil Chart Indicating Possible Trade Set-Up.

  The December 2012 soybean oil chart shows that soybean oil prices have been in a trading range since the first of July 2012 with the 52 cents per pound area providing strong support. According to the weekly and monthly soybean oil charts, soybean oil is in a longer term downtrend and a close below the support at the 52 cent level would provide confirmation that the longer term downtrend has resumed. According to some basic Elliott Wave analysis, December 2012 soybean oil may have completed a 1-2, 1-2 formation which would be followed by a wave 3 of 3. Per Elliott Wave theory, a wave 3 of 3  is a powerful move and so a wave 3 of 3 to the downside would be a very powerful move to the downside in soybean oil. In fact, a strong wave 3 of 3 move to the downside could take prices all the way down to the 40 cent per pound level. This is very strong support on the monthly chart.

  If I were to get a signal to short this market, I would buy a December 2012 soybean oil put. The December 2012 soybean oil options expire on November 23, 2012, which is 113 days as of August 2, 2012. As of this post on August 2, 2012, December 2012 soybean oil is trading at 54.42 cents per pound.