07/02/2025
Strategy Idea...Bullish Coffee Option Spread
Coffee futures tend to move $1.00 at a time, then reassess. We are nearing that point as we approach what is generally the seasonal low. By mid-July, the weather premium priced into the market in anticipation of adverse weather in Brazil is completely removed, and the market resets. That reset is often an inflection point that can be described as a harvest low. Further, prices slid below the trendline this morning and are poised to close above it. We are taking this as a sign of exhaustion. We like playing the upside, but doing so requires a high tolerance for risk. Coffee has been coffee'ing, but the trendline and seasonals will be supportive.