Coffee Heats Up Again: Six Months Ago, We Told You A Coffee Fund Was One Of Our Top ten Names. It's Up 54% Since, And Now It's One Of Our Top Names Again.

Coffee more expensive? As Jeremy Irons' character in "Margin Call" says, "I'll have to pay".

Our Top Name From Two Months Ago

Six months ago (Too Much Crypto, Not Enough Stuff), we wrote about coffee shortages and noted that the leading coffee exchange traded note was one of our top names:

In a nice bit of synergy, Bloomberg licenses its commodity indexes to the sponsors of exchange traded products. So not only does it report on rising commodity prices, but it also profits from them. Coincidentally, one of those exchange traded products, the iPath Series B Bloomberg Coffee Subindex Total Return ETN JO was one of our system's top ten names on Monday.

Screen capture via Portfolio Armor on May 17th, 2021.

Since then, JO has been on a tear. Illustrating the theme of consumable commodities outpacing precious metals during the reflation trade, the two silver names in our top ten from May 17th, the iShares Silver Trust SLV, and ProShares Ultra Silver AGQ, were the worst performers over the next sis months. 

Nevertheless, those top ten names, on average, were up 22.1%, versus 13.4% for SPY over the next six months. 

A Top Name Now

JO was our #1 name on Wednesday. 

 Screen capture via Portfolio Armor on 11/17/2021

In Case Coffee Gets Cold

In case coffee gets cold over the next several months, here's a way to limit your downside risk. As of Wednesday's close, this was the optimal put option to protect against a greater-than-25% drop in JO by mid-June. 

Screen capture via the Portfolio Armor iPhone app. 

If you have a lower risk tolerance, you can use our app to scan for an optimal hedge against a smaller decline; if you don't like paying to hedge, you can scan for an optimal collar with negative cost, or a net credit. 

Posted In: coffeecontributorsTrading Ideas

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