Sugar Traders

[arabianights]

Implied volatility in sugar calls is very high right now, I'm looking at some short vol strats.

Is it really so high when you consider it's making multi year highs?

Geniune question, as I said earlier know nothing about this... I'm just stopping you from feeling lonley

 

[Infinetyp]

I only buy sweeteners and coke light so I'll short this baby...(demo account only, as nobody gives a sh£t)

 

[Masterful]

Is it really so high when you consider it's making multi year highs?

Geniune question, as I said earlier know nothing about this... I'm just stopping you from feeling lonley

If we compare with the multi year highs made at the beginning of the year when sugar shot through 30 cents, average IV topped just below these current levels and was already dropping off when those highs were made. The chart I posted gives you an idea but it doesn't show the full story of the vol curve.

You also can't ignore the fundamentals, there are a number of catalysts right now which could push vol through 60 (eg. india decides not to restrict exports), but as uncertainty diminishes there may be a window where it looks a good short.

 

[tar]

what about sugar Jul/13 it is at 17 cents , is it a good investment to buy into this backwardation for long term investing ?

 

[Masterful]

That would depend on your own research, statistically sugar switches between contango and backwardation all the time and is spends more time in contango.

 

[Masterful]

If we compare with the multi year highs made at the beginning of the year when sugar shot through 30 cents, average IV topped just below these current levels and was already dropping off when those highs were made. The chart I posted gives you an idea but it doesn't show the full story of the vol curve.

You also can't ignore the fundamentals, there are a number of catalysts right now which could push vol through 60 (eg. india decides not to restrict exports), but as uncertainty diminishes there may be a window where it looks a good short.

*The e.g. should be if India DOES decide to restrict exports

 

[Masterful]

India signals a larger than expected surplus.........sugar takes a massive sigh of relief. Sugar has been off 431 ticks from the high of the day.

 

[Masterful]

Below 27 cents! Thats a serious move! Drops across the board in commodities, statistically its expected, that is following a big run up we get a violent down swing.

 

[arabianights]

masterful are you gonna investigate the milk complex?

 

[Masterful]

If there's money to made!

 

[tar]

what about sugar Jul/13 it is at 17 cents , is it a good investment to buy into this backwardation for long term investing ?

yes , it is now 22 cents .

 

[tripleogstar]

If there's money to made!

do you trade options on these soft commodities? I mean i know nothing about soft commodities options market but interesting to know what the curve looks like in these markets. Is there a call skew in these markets? i.e vol on calls increases as you rally.

 

[Tint]

Sugar 02.08.12

The market seems to have already priced-in a world production surplus this year and any signs that global demand is improving or that supply may be lower than expected may help support. Sugar has remained in a relatively tight range since mid-November but open interest is up more than 200,000 contracts in this time frame.
News overnight that China will stockpile 1 million tonnes of white sugar for state reserves should help support the China domestic market and should lead to increased imports by China on the world market. Traders anticipate a global 3-5 million tonne surplus for the 2012/13 season which is down significantly from this year but still a surplus...Click here to read the full report: Stock Market News

 

[Tint]

Sugar 02.09.12

The sugar market seems to have already priced in a world production surplus this year, and any signs that global demand is improving or that supply may be lower than expected may help spark a turn higher. Sugar has remained in a relatively tight range since mid-November, but open interest was up more than 200,000 contracts in that time frame. Traders anticipate a global production surplus of 3-5 million tonnes this year, which is down about half from last year. ...Click here to read the full report: Stock Market News

 

[Tint]

Sugar 02.13.12

Supportive news from outside market forces helped to support London futures overnight but the US market held mostly steady as the market is trying to consolidate the late gains from Friday. March sugar closed 14 higher on the session Friday and up 73 points for the week. The market traded moderately lower early in the day as a surge up in the USD and weakness in nearly all other commodity markets sparked a long liquidation sell-off. However, a steady flow of commercial and trade house buying and talk that China may be a more active buyer ahead helped to spark a 50 point rally off of the lows into the close. London futures closed just slightly lower on the day and this may have encouraged new buying...Click here to read the full report: Stock Market News