Prices will fluctuate of course. But the market will now have to live with this new projected supply as it's backdrop for the next 6-9 months. This should help to pressure upside rallies and extend downside probes in the coming months. That might not help a futures trader much. But for an option seller, it's nearly a perfect recipe. As a seller of options, you do not need to predict outright direction. You only have to get a general idea of what prices will not do.In this case, you would look to sell calls on any technical coffee rallies of 5-10 cents per pound. Coffee is one market that offers deep out of the money strikes for call sellers, often 50-100% out of the money. We advise you gladly take these premiums from willing buyers. It is highly unlikely coffee will rally anywhere near these levels with a record 2012 crop seeming more likely every day.

James Cordier & Michael Gross
Contributing Writers, Liberty Trading Group/Optionsellers.com
Optionetics.com ~ Your Options Education Site

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