Spread Betting on Coffee

Where to Spread Bet on Coffee

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Spread Betting on Coffee

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:   Higher than $216.65, or   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

You Decide Whether to Buy or Sell	Where do you believe Coffee will settle on 10 April 2012:   Higher than $216.65? or   Lower than $216.45?
You Might Decide to Go Long	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

You Work Out Whether to Go Long or Short	Where do you think that Coffee will close on 10 April 2012:   Higher than $216.65? or   Lower than $216.45?
Let's Assume You Want to Sell	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:

• Online spread betting prices from InterTrader as of 2 February 2012
  
  
• Most spread betting firms will also let you financial spread bet on Coffee in euros/cent and US dollars/cent
  
  
• In addition, financial spread betting also lets you take positions on a large variety of other asset classes. Also see:
  
  
  • Stock Market Spread Betting
  • Currencies Financial Spread Betting
  • Spread Trading on Commodities

Demo Accounts for Spread Betting on Coffee

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Spread Betting on Commodities

• Spread Betting on Commodities
• Spread Betting on Gold
• Spread Betting on Crude Oil