Options in MCX - Beginng of New Era for Commodity Trader

headstrong007

----- Full-Time ----- Day-Trader
#3
@marimuthu13 thanks for sharing it first.
But most traders are waiting for crude as it moves bigger and faster than Gold. Sebi approved only one option each segment for starting. So we have to wait for Crude options as they choose Gold first. This is a big disappointment for Crude Oil traders.

Crude always the first choice for options buyers as 5-8% is not rare in crude, but it is very rare in Gold. Option buyers actually provide the liquidities, not the option sellers. Sellers are always there to trade with higher volumes. For starting Crude may have the better choice. IMO.

Gold future has higher volumes, but lets see which gain more popularity with options. According to the movement, crude has a better chance in options.
 
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headstrong007

----- Full-Time ----- Day-Trader
#4
The previously published article said Gold options from AUGUST 2017.
But really waiting for crude options which is moving over 1-2 percent most of the days.
 
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headstrong007

----- Full-Time ----- Day-Trader
#5
According to experts,
The cost to trade one lot (1 kilo) of gold futures at Rs 28.6 lakh was Rs 1.43 lakh, or around 5% intraday on Thursday. An option contract will be available at just a fifth of that, or Rs 29,000.

IMO-
But still, 29,000 is the large amount for one lot as option buyers try to average at lower points. So to do average just 4 times it'll cost over Lakhs. I don't how will be popular with small traders. Small traders provide the liquidity in the market. 30,000 PER LOT for options is too much riskier for small players.
I doubt about the popularity of such high-cost options, mainly hedger will buy.
A weekly option will reduce the cost to one-fourth. This must for Gold options. MCX will understand it with times.
For monthly options, crude oil is much better for multiple lots buying and averaging. It's not a 30lakh contract. Gold options surely face liquidity problem if the price is about 30,000 per lot.
For first experiment Crude was a better choice, contract value only about 3 lakh, options per lot cost approx 3000 only.
Bid ask spread will be wider in Gold options due to low liquidity.
 
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headstrong007

----- Full-Time ----- Day-Trader
#6
When crude is more popular among mcx traders, it has higher volume and total traded value, then why MCX prefers Gold over Crude as 1st option for experiment and testing??
If testing with gold failed due to low liquidity and SEBI don't give permission to introduce another option, then only MCX is responsible for this harakiri.

By today's record, it is clear that nowadays Crude is far ahead than Gold.

 

marimuthu13

Well-Known Member
#7
its already started from exchange point of view..

but brokers and traders has to be get ready.

we are pleased to offer our clients additional mode of risk containment with Commodity Options trading. At present exchange has started Options trading in GOLD Future contracts and going forward will be extended to other active futures contracts also.

As per exchange requirement, we are forwarding you the “Additional Risk Disclosure documents for Option Trading” about Risk of Option Holders and Risk of Option Writers. Kindly go through the same before initiating your trades in options.

Further to start trading in Commodity Options, you are required to provide your consent in the attached format to activate your account for Commodity Options trading.

Kindly submit the duly signed copy at the earliest to avail of opportunities on account of introduction of Commodity Options trades.
 

marimuthu13

Well-Known Member
#8
Personally i am not going to touch any options contract in MCX even if they allow crude contract option trading..

Have to wait and watch for minimum of 6 months to 12 months this option wala game in MCX
 

Shikamaru

What a drag!!!
#9
Personally i am not going to touch any options contract in MCX even if they allow crude contract option trading..

Have to wait and watch for minimum of 6 months to 12 months this option wala game in MCX
100% I agree.... Most of MCX price need to follow the International Quote (by means of spread or Zero Spread) and Our Supply/Demand....
Also Metals are very reactive to USD index, I am excited to see how metal options will handle this 2 attributes!
 

headstrong007

----- Full-Time ----- Day-Trader
#10
I am eager to see the price movement with options in Crude during Wed day-inventory days when crude move 1-2% within few minutes. 50pt strike better than 100pt strikes as 100 means almost 3%.
Bank nifty option is popular only bcoz it move bigger. Main reason strikes are much closure- 100pt strikes about 0.4% and there are weekly options which cost about one-fourth premium than the monthly options.

MCX need understand all the things, right before introducing options to make it popular.
They must know MCX traders are much lower than Equity. I saw many good equities traders avoid commodities only bcoz they can't manage the risk in it.

GoldM option is better choice to bring liqidity than a 28-30lakh priced 1kg Gold Option Contracts. But who listens to traders? NSE-BSE-MCX-SEBI all are increasing the lot size to increase the total traded volume but it is reducing liquidity & increasing the slippage.
No trader will trade an option if bid ask is wider. I'll first see the liquidity first and possible slippage with SLM, the possibility of filling in the percentage of a big order with Limit.

I am waiting for options mainly bcoz of trading crude Wed day. It's challenging and big rewarding with options if the liquidity permits.
 
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