Day Trading Stocks & Futures

[afin]

at least MCX is financial derivative and settled as such. I'm not sure about any other exchanges.

It's nothing new. Most exchanges around world offer financial derivatives only.

Wrong. MCX allows for physical delivery at the JN Port in Mumbai.

 

[siddhant4u]

Wrong. MCX allows for physical delivery at the JN Port in Mumbai.

I dont' trade commodity.

My knowledge was from Contract Defn on their website

https://www.mcxindia.com/docs/defau...t-2020-contract-onwards.pdf?sfvrsn=feb38290_0

Beside, can't find anything related to crude oil in their settlement calendar.

 

[mohan.sic]

Please can an informed party please share their thoughts on this? Why does a contract on a commodity exchange in India reference the price of a physically settled commodity delivered to the middle of nowhere USA? How does this contract even hedge any party's commodity price risk in India? If it serves little to no purpose as an instrument for risk management what is its purpose other than speculation and why is it even permitted by the regulators?

Why is there no locally physically settled contract available and traded? Using WTI/Brent or any other middle eastern / Singapore benchmark only seems to display the sheer laziness of all parties involved.

Disclaimer: I've never traded commodities on any exchange anywhere.

Why MCX crude settlement price is derived from wti price could be simply because wti is the benchmark of mcx crude.

The cause for this havoc is the "physical delivery"

Cannot underestimate the knowledge of regulators/exchange's but this is a never in history case and so may be this scenario was not considered in designing the contract framework when the mcx settlement was fixed at wti close. May be in future the havoc due to this new possibility we have learnt will be addressed with certain changes in contract rules.

 

[siddhant4u]

Plus most traders forget that original reason for 'Future and Options' is for hedging physical positions and not for gambling on day to day basis (which we all do now a days).

It's rude awakening for many that commodity prices could go negative. And major Energy/commodity Trading S/w does have provision for negative price.

 

[moneymanager1980]

Plus most traders forget that original reason for 'Future and Options' is for hedging physical positions and not for gambling on day to day basis (which we all do now a days).

It's rude awakening for many that commodity prices could go negative. And major Energy/commodity Trading S/w does have provision for negative price.

YES u r correct that options is for hedging .. but the famous saying is " Even I dont mind I proved wrong until I earn " .. that the motive many gambling in that ...

 

[TraderRavi]

fed up ya .. one day up and next day down .. how to trade this mkt >?

Nifty stuck between 8900 -9300.

 

[tortoise]

I updated my response earlier.

MCX allows some commodities financial settled and others as deliverable.

View attachment 42008

Crude palm oil != crude oil

 

[TraderRavi]

 

[siddhant4u]

Crude palm oil != crude oil

I know, this is why I'm saying Crude Oil is financial derivative and NOT Deliverable. I was showing the warehouses list for OTHER commodities.

 

[TraderRavi]

fallout of crude meltdown