In my opinion Cocoa can potentially rally further. May futures 2,415 last of this writing, even with the 2018 rally of almost 23% I am looking at a potential of 2,600 to 2,650 in May Cocoa. Issues with hot dry weather effecting both late main crop and mid crop production. An El Nino weather event potential, pod eating caterpillars effecting all crop types add to concerns with already tight supplies. Inventories have fallen in the last 7 months to an 18 month low of 3.319 million bags even though there is a potential of a large crop in West Africa prices can stay strong, Fund accounts are getting long also.
Buy April Calls on May Futures, the April 2,550 Call cost 95 = $950.00 of quantifiable risk plus fees and associated costs per transaction to enter the trade. The April 2,600 Call cost 81 = $810.00 of quantifiable risk plus fees and associated costs per transaction to enter the trade.
For downside protection or a contrarian view for a potential sharp move lower consider the April 2,300 Put cost 63 = $630.00 of quantifiable risk plus fees and associated costs per transaction to enter the trade.
APRIL OPTIONS EXPIRE 3/1/2019 IN 58 DAYS
UNDERLYING FUTURES ARE THE MAY CONTRACT
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