Coffee Spread Betting Guide

Coffee Spread Betting Guide

Coffee Spread Betting Guide

arrow_forwardLive Coffee Chart
arrow_forwardLive Coffee Prices
arrow_forwardWhere to Spread Bet on Coffee
arrow_forwardHow to Spread Bet on Coffee


Live Coffee Chart and Prices



Where Can I Spread Bet on Coffee?

Most spread betting brokers offer prices and charts on commodities including Coffee e.g.:

Company Commodity
Markets?
Commodities
Min Stake
Mobile
Apps
Guaranteed Stop Free If Not Triggered? Inactivity Fee Trading Offer Apply
Financial Spreads Review check_box £0.50 check_boxiOS
check_boxAndroid
check_box £0 check_box Apply
City Index Review check_box £0 check_boxiOS
check_boxAndroid
cancel £0 cancel Apply
ETX Capital Review check_box &pound:0.50 check_boxiOS
check_boxAndroid
cancel £15 cancel Apply
IG Review check_box £1-5 check_boxiOS
check_boxAndroid
check_boxWindows
check_box £12 cancel Apply
InterTrader Review check_box &pound:1 check_boxiOS
check_boxAndroid
cancel £0 check_box Apply


How to Spread Bet on Coffee

For example, let’s suppose that you are considering financial spread betting on Coffee, so you go on a financial spread betting website, like InterTrader, and they are offering the latest market price priced at:

Coffee (May) Futures: $216.45 – $216.65

This is what to expect from a futures spread betting market:

The Spread Trading Market Coffee (May) Futures
Spread $216.45 – $216.65
How the Spread Works You can take a position on the Coffee Futures market settling:

  arrow_upward  Higher than $216.65, or
  arrow_downward  Lower than $216.45

When the market closes on the closing date for the ‘May’ futures spread betting market, 10 April 2012.

It is important to be aware that, because this is a futures market, your position will automatically close when the May Coffee contracts expire, 10 April 2012. However, you can close your trade before the expiry date.
Units (Points) Traded Futures trades on the Coffee market are made in £x per cent.

Where a cent is $0.01 of the commodity’s price movement.

E.g. if Coffee changes by 40¢ ($0.40) then you would lose or win 40 multiples of your stake.
Stake Size per Unit You decide how much you want to risk per cent, e.g. £1 per cent, £3 per cent, £20 per cent etc.
Quick Staking Exercise As an example, if you had a stake of £4 per cent and Coffee moves $0.23 (23¢), you would lose / win £4 per cent x 23¢ = £92.


Spread Trading Example | Buying Coffee

Spread betting on the commodity market to rise in value

You Decide Whether to Buy or Sell Where do you believe Coffee will settle on 10 April 2012:

  arrow_upward  Higher than $216.65? or
  arrow_downward  Lower than $216.45?

You Might Decide to Go Long   arrow_downward  Higher than $216.65
You Choose How Much to Risk, Let’s Assume You Select £2 per cent
Now What?
  • You will make a profit of £2 for each cent ($0.01) Coffee settles higher than $216.65
  • Your spread bet loses £2 for every cent ($0.01) Coffee settles below $216.65
If You Are Betting on a Market to Go Up Your P&L = (Final Price – Opening Price) x stake per cent
 
Example 1 Coffee pushes higher and the price of the futures market is adjusted and moved to $217.52 – $217.72.
Close for a Profit? At this point, you may choose to keep your bet open until expiry or close it, i.e. close your spread bet to lock in your profit. In this example you opt to settle your trade early and sell the market at $217.52.
Your P&L = (Final Price – Opening Price) x stake per cent
($217.52 – $216.65) x £2 per cent
$0.87 x £2 per cent
87¢ x £2 per cent
Your P&L = £174 profit
 
Example 2 Coffee slips and the futures market is adjusted to $215.87 – $216.07.
Time to Restrict the Loss? At this point, you can opt to keep your futures trade open until expiry or close it, i.e. close your position and restrict your loss. In this instance you choose to close your bet and sell at $215.87.
Your P&L = (Final Price – Opening Price) x stake per cent
($215.87 – $216.65) x £2 per cent
-$0.78 x £2 per cent
-78¢ x £2 per cent
Your P&L = -£156 loss


Worked Spread Betting Example | Going Short of Coffee

Financial spread trading on the commodity market to move lower

You Work Out Whether to Go Long or Short Where do you think that Coffee will close on 10 April 2012:

  arrow_upward  Higher than $216.65? or
  arrow_downward  Lower than $216.45?

Let’s Assume You Want to Sell   arrow_downward  Lower than $216.45
You Decide How Much to Risk, Let’s Say You Choose £1 per cent
What Happens Next?
  • Your spread bet loses £1 for every cent ($0.01) Coffee settles above $216.45
  • You will make a profit of £1 for every cent ($0.01) Coffee settles lower than $216.45
If You Sell a Market Your P&L = (Opening Price – Final Price) x stake per cent
 
Example 3 Coffee falls and the quote for the spread betting futures market moves to $214.82 – $215.02.
Take a Profit? At this point, you could opt to leave your bet open until expiry or close it, i.e. close your position for a profit. In this example you decide to close your trade at the current price by buying at $215.02.
Your P&L = (Opening Price – Final Price) x stake per cent
($216.45 – $215.02) x £1 per cent
$1.43 x £1 per cent
143¢ x £1 per cent
Your P&L = £143 profit
 
Example 4 Coffee rises and the spread betting futures market is revised to $217.54 – $217.74.
Time to Limit the Loss?At this point, you could choose to let your futures trade run to expiry or close it, i.e. close your trade and limit your loss. For this example, you choose to close your bet at the current quote and buy the market at $217.74.
Your P&L = (Opening Price – Final Price) x stake per cent
($216.45 – $217.74) x £1 per cent
-$1.29 x £1 per cent
-129¢ x £1 per cent
Your P&L = -£129 loss


Coffee Notes:


AuthorAlex Turner

Senior Editor, SpreadBetMagazine

Leave a Reply

Be the First to Comment!

Notify of
wpDiscuz