We are often told that option Greeks are very complex, and in fact this complexity is one of the reasons that many business and traders fear options or steer clear of them altogether. However, the option Greeks exist for one very simple purpose: they convert the vague and chaotic nature of option pricing into orderly specifics that enable you to make decisions. You can trade options without understanding the greeks, and in fact, you can even be quite good at it. However, this is like driving...

Its no secret that many roasters and traders are scared of options. Over the last decade, my key function in the coffee industry has been to manage risk (and teach risk management) in the coffee market. Options are hands down one of the most valuable tools available for this purpose, and yet I have seen the same scene many times when discussing options with clients, colleagues and friends: a worried look and a grimace, followed by a quiet “oh, as a rule…we don’t trade options.” Rules like...

One of the biggest challenges that coffee roasters face is the volatility in price of their chief supply component: coffee beans. Over the past 5 years, coffee beans have fluctuated in price from 130 to 430c , and at times intraday swings have been as high as 40c. This means that you could face up to a 10% increase in price , simply depending on when you bought your coffee beans in the morning or in the afternoon! This exposure to market price fluctuations is known as price risk , and...