Resource Trader Alert
Urgent July Coffee Trading Alert January 10, 2007
Action to take, call your commodity options broker and say: "I want to buy the July Coffee (KCN7) 160 calls at 290 or better ($1,087.50) (discretion to pay up to 300 $1,125) Good Till Cancelled." Dear RTA Readers:
Ok, well hasn't this just been a fun start to the new trading year? I mean I have been trying to get you in about three trades this week and the pit will just not make a fair price. It's always like this in the start of the year. Anyway, pay little attention to what is happening in the energy pits the sell off in crude will mostly affect the front couple of months and as soon as cold temperatures roll around the price will gradually get more expensive.
The energy markets aside gold and our very sad sugar position look as though they may be disappointments this quarter. I will let you know that a little bird, whom is very reliable, has told me a large fund buyer needs to purchase thousands of sugar contracts by the end of the month. If you watched sugar late yesterday that's why the price rallied at the end of the day. This may help prop our sugar options back up enough to recoup some equity, let's keep our fingers crossed.
I am still very confident about our cattle and cotton trades and if I was going to add to anything so far, it would be those. I will also tell you to take a look at our 2008 corn options and how well they have held up, not bad.
Anyway, what we need to do now is lock in some more positions here when things are relatively negative for most commodity prices. One market that is really on the launch pad this year I think is coffee. Coffee is one of those commodities that can be tricky to trade but also very profitable. Now, over in Jurojin we just bought coffee futures for May on the cheap and now I want to bring you an option play on coffee that I think could payoff big time this year. This market is volatile indeed so if fast paced markets scare you this may not be the trade for you. The good news is remember, we are using options so we know our total risk up front. Now there are many reasons to buy coffee. I have written about it for Jurojin so if you're a member then you already know. I don't want to take up time in this alert to go over each reason, so what I will do is tell you about it either tomorrow or Friday in our mailbag update issue, ok? For now get this coffee order in right away and do yourself a favor only pay the suggested price for the option be patient, do not chase the market. If you don't get filled that's ok too it's a GTC order so it will work until you do or we cancel it. Good Luck and be sure to let me know how your doing as that's always very important to me to know where your getting filled. kkerr@kerrtrade.com. Remember though send all customer service questions to rta@agorafinancial.com.
Now here's what to do:
Action to take, call your commodity options broker and say: "I want to buy the July Coffee (KCN7) 160 calls at 290 or better ($1,087.50) (discretion to pay up to 300 $1,125) Good Till Cancelled."
Currently the July 160 call is 260 bid 310 offer with the futures at 124.50
As an alternative if you prefer to by closer in look at the July 150 calls which are 370 bid / 430 offer or if you prefer to go further out look at the 170 calls, which are currently 180 bid/230 offer. The July coffee options expire June 8th, which gives these options around 149 days until expiration.
**Kevin's trading note: Coffee options are $3.75 a point so that's how we figure the premium. Just take the number of points and multiply by $3.75. For our trade today all we did is take 290 x 3.75 = $1,087.50. Remember make sure to work your bid, do not chase the market and don't let your broker do it either.
Yours for Resource Profits,
Kevin Kerr, Editor | 
