coffee question?

Discussion in 'Commodity Futures' started by trading_time, May 14, 2006.

  1. I went to:

    For information on coffee and am a little confused. (also is this the official exchange coffee trades on?)

    Minimum Price movement
    5/100 cent/lb., equivalent to $18.75 per contract.

    Does the above mean that for ever .20 cent tick (or .05?) = $18.75?

    Also is the tick the same as the spread, or may the spread at times occur to be several ticks?

    Many Thanks.

  2. (1) The tick size means that the market can trade: 103.00, 103.05, 103.10, 103.15, 103.20, 103.25 et al. (2) That's what it means to have price fluctuations, i.e. "ticks", of 5/100ths of a penny. (3) The contract size of 37,500 pounds per contract multiplied by the tick size produces the $18.75-per-tick value. (4) The bid-ask spread for a particular contract in the market can vary depending on conditions. (5) If you're going to trade coffee, start out with deeper pockets. Summer months can be rocky and wild.