Picking each other’s pockets on lack of outside participation
In New York, cotton prices settled back down today, giving back another portion of yesterday’s gains in quiet trading today. The active December futures contract wasn’t active, and spent the session trading between 5675 and 5630 under extremely light volume conditions. Therefore, circumstances indicate traders either are already positioned for the key crop report on Friday, or simply waiting for another day to take action.
The weekly (USDA) crop progress report showed that an average of 35% of the new crop is in very-poor to poor condition compared with last week's 34% and last year's 11%. An average of 38% of the new crop is in good to excellent condition compared with last week's 39%, and last year's 61%. The New York Board of Trade (Nybot) Spec Hedge number was higher than expected, showing specs holding a net 13.8% long position, versus last weeks 8.7%.
One example of the attitude presented in the trading session was that local option traders took time to square positions, resulting in larger volume. In fact one local, who was headed for vacation, traded 200 of the Dec 57/60 call spreads at 112, with futures 5660. At the time of the transaction, this move doubled the volume in options. Subsequent book squaring was responsible for the bulk of today’s option volume, although other option trades of note included an early sale of 100-Z 52 puts at 105 and the sale of 100-March 54 puts at 175. There was the purchase of March 59 puts at 400, around 200 times. Additional trades included the sale of 300 Dec 58/61 call spreads and the purchase of 300 Dec 53/56 put spreads.
Moving Averages
December (56.88)
March (59.68)
Options Month
Implied Volatility
9 Day
56.12
58.95
Sept.
25.00%
18 Day
55.14
58.05
Oct.
27.00%
40 Day
55.00
57.81
Dec.
26.00%
100/200 Day
56.12
57.30
58.57
n/a
March
24.75%
Futures
Calls
Puts
May
23.50%
6,000
5,000
1,600
July
22.50%
Look for:Support at: 5631, 5610, 5585-5570, 5528, 5470, 5428 and 5405-5383. Resistance at : 5700, 5727-5741, 5769-5780, then 5824, and 5948.
Jurgens Bauer jurgens@gmail.com PICO-Cotton (212) 748 - 1388 trading floor (973) 652 - 4694 mobile (212) 742-5284 fax
