MCX Completes First Commodity Options Contract

MUMBAI:
India’s first Options contract in Gold, with the Gold (1Kg) Futures as the underlying, witnessed active participation from the commodity market participants by MCX. The Exchange had, on 17th October 2017 launched two options contracts viz. expiring on 28-Nov-17 and 29-Jan-18. These option contracts had the 05-Dec-17 and 05-Feb-18 Futures contract, respectively, as the underlying.
The performance highlights of Gold Options for the period between 17th October to 28th November 2017 were as follows-:
The open interest (OI) increased from first day’s 1030 lots to a peak of 1969 lots.
The total notional turnover of options during the period was Rs 6037.1 crores and the premium turnover was Rs 39.79 crores. The front month option contracts with 28-Nov-17 expiry witnessed notional turnover of Rs 3862.28 crores (12,913 kilograms) for call options and Rs 2056.75 crores (6978 kilograms) for put options.
Of the front month option series, the Call option with strike price of Rs 29,800 and put option with Rs 29,000 were the most traded contracts.
During the period, Average OI and Volume in Gold Options were 21.25% and 9.24% respectively, that of the underlying Gold 1KG Futures contract. Nearly 60% of the registered members had participated in Gold options.
At expiry of 28-Nov-17 option series contracts, there were 858 open positions. And, of the 47 In-the-Money (ITM) and Close-to-the-money (CTM) contracts (which were exercisable) 44 contracts valuing Rs 13 crore were exercised and their positions devolved into underlying futures positions.
On the day of option’s expiry, the underlying 5-Dec-17 Gold futures contract closed at Rs 29,393 per 10 grams.
Highlights of the unique settlement mechanism in Options-:
The Exchange and market participants successfully went through the trading and settlement cycle that entailed – (i) sensitivity report being disseminated from 22nd November 2017 end of day onwards to members with positions, preparing them for margins on development (conversion) of options to futures (ii) pre-expiry margins being levied by the exchange on positions on 27th & 28th November 2017 (iii) the exercise session being used by members for position conversion into underlying Gold futures. The entire development process went through smoothly.