Sometimes things don’t work out. The bullish chart setup in coffee we identified in Alert #2, was negated by yesterday’s second, consecutive, lower close below our risk point of $1.60 in the May contract. Global coffee demand is expected to increase dramatically over the next few years due to its growing popularity in Asia and weather continues to be a potentially bullish factor but neither has been enough to stem the tide of selling – at least not yet.
This is why we trade options. The markets will not always cooperate. We like to keep our losses as small as possible when they don’t. Coffee made a valiant attempt to hold support at our risk point but was unable to. That means the time has come to bid our May bull spreads adieu. Consider placing an order to exit them for 30 points ($112.50) or higher. We will continue to monitor this market for new entry opportunities.