Week in and week out, that commercials are active buyers on weakness and sellers on strength. If we look at the delta position taken from the Supplemental, we see the reason. It appears that commercials are active delta traders and possibly specs are so to a lesser degree. As referred to in the past, a high delta position will limit real volatility and confine the range. But if the market for some reason were to have a sharp move, those that are short delta will add to the frenzy and increase volatility further, (the good old days). We also see from the Supplemental that the changes in delta have shrunk meaning that interest in options has decreased together with reduced changes in futures prices.
Continuous and intense fund selling is no longer a given that it was. Some weeks they hardly register on the COT and sometimes they are of course buyers. For this COT, they were the only net sellers and they may have finished the week as such, while every other group was a net buyer. Hopefully we’ll break out of this rangebound market but for now outright trading and spreads are both subdued. We are currently in a supply driven market, as opposed to a consumer driven one, in my view, together with a negative investment environment.
Robusta has been alo quiet and trailing Arabica except for one day this week when it dropped sharply, adding pressure to Arabica. October options expire on Friday.
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