Topic : Webinar on How to trade in Gold & Silver ?

Disclaimer: The Contents do not constitute professional advice or

provision of any kind of services and should not be relied upon as
such. MCX does not make any recommendation and assumes no
responsibility towards any investments / trading in commodities or
commodity futures done based on the information given in the
website and any such investment / trade are subject to investment /
commercial risks for which MCX shall not be responsible. If financial,
investment or any other professional advice is required, please seek
advice of competent professionals.
 PRESENTATION FLOW

• What is Commodity?
• Why Commodity?
• MCX Precious Metals Futures & Options

3
BACKGROUND ….

• Integration of broking arm

• Common KYC
• Common Margin
• Stocks as collateral
• Mini Contracts
• Research facility
• Centralized dealing desk
• Regional support 24/7

3/9/2024 4
WHAT IS COMMODITY ?

“Commodity” is a product having commercial value

and which can be produced, bought, sold and
consumed.

E.g. Gold, Silver, Crude, Copper, Cotton etc.

There are basic two main groups of commodities

1. Agri Commodities &
2. Non agri Commodities.
 WHY COMMODITIES ?
 Easy to understand and have positive co-relation with inflation
 Commodities markets are driven by global prices, hence less scope
for price manipulation
 Historically, commodities have outperformed equities and always
provide good opportunity for traders due to active movements
 Best way to diversify your portfolio
 Very thin margins, ranging from 8 to 10 %
MCX PRODUCTS BASKET

Segment Contract
1 Futures Bullion(Gold, Mini, Guinea, Petal, Silver, Mini,
Micro),
(FUTCOM) Base Metals (Copper, Zinc, Lead, Nickel, Aluminium)
Energy (Crude Oil, Natural gas)
Agri (CPO, Cotton, Mentha Oil, Rubber, Kapas,
Cardamom).
2 Options on Futures Crude Oil, Natural Gas, Gold, Gold
(OPTFUT) Mini, Silver, Silver Mini, Copper, Zinc,
Nickel.
3 Index Futures Bulldex ,Metldex, and Enrgdex.
(FUTIDX)
 TRADING SESSION

• Monday to Friday
• Agricultural commodities:

9.00 a.m. to 5.00 p.m.

• Selected agri commodities :

9.00 a.m. to 9.00 p.m.

• Bullion, Metals and energy

9.00 a.m. to 11.30/11.55 p.m.

• Holidays notified in advance

 GLOBAL MARKETS - TRADE TIMINGS

EXCHANGE INDIAN STANDARD TIME (IST)

LME 05:30 to 23:30* & 16:10 to 20:45 **

Shanghai Futures Exchange (SHFE) 06:30 to 9:00 & 11:00 to 12:30

CME 04:30 a.m. to 03:30 a.m.

MCX 09:00 to 23:30 #

*LME select
**LME Ring timing (Start time:- Ring session, End time - Kerb Trading) – includes both session
#: Daylight timing 09:00 to 23:55 (Winter)

DID YOU KNOW ?

GLOBAL ECONOMIC UNCERTAINTIES KEEP COMMODIT Y PRICES HIGHLY VOLAT ILE. USE FUTURES TO LOCK IN YOUR PRICES.
FACTORS AFFECTING PRICES
• Prices ruling in the international markets GLOBAL TRADE TIMINGS
• Forex rates
INDIAN STANDARD
EXCHANGE
• Geo-Political factors – Global and Indian TIME (IST)
• Trade policy and Regulations CME 04:30 to 03:30
- Tariff & Non-Tariff Barriers including taxes, quota 09:00 to 23:30 / 23:55
MCX
based on day light savings
• Industrial factors and growth
• Economic Factors –
- Economic conditions e.g. recession, inflation
- Trends in fast growing economies
- Employment and housing data from major economies especially U.S.
• Commodity specific events & statistics –
- Demand & supply scenario
- Seasonality in India – Marriages & harvesting

10
TIME…..WHEN VOLATILITY IS MAX!!!
Timings Important Global Cues
(IST)
9:00 am MCX Opens

12:30 pm London Market Opens

01:30 pm LME Inventory data

04:00 pm LME Ring Opens

05:50 pm Opening of COMEX Session

06:00 pm Release of U.S Economic Data

07:00 pm US Stock Market Opens

08:00 pm Crude Oil and Natural Gas Inventory Data on Wednesday and
Thursday respectively

09:00 pm LME Ring Closes

11:45 pm Closing of COMEX Session

A TYPICAL GOLD VALUE CHAIN

Refined
International Importing Bullion Scrap
Miner
Bank Bank Wholesaler

Refined/Scrap
Refiner

Semi- Jewellery Scrap

Consumer Retailer
Wholesaler Manufacturer
Refined

Scrap Scrap Scrap

12
BENEFITS OF THE HEDGING PLATFORM
• Exchange prices are often taken as benchmark for value-chain and end-consumers alike
• Prices have in-build hedge for : Gold price, USD-INR, Import duty changes, prevailing premium / discount; which enables all
major value-chain participants:

IMPORTER BULLION TRADER BRANDED JEWELER RETAIL JEWELER EXPORTER

• Trading hours are stretched till almost midnight to match trading time in the global markets. So, Indian participants are able to
manage price risks as efficiently as global counterparts.

OTHER BENEFITS OF HEDGING

• Efficient use of capital – e.g. can lock the price on MCX by paying only 5% margin and can utilise balance capital for expanding its business further
• Lock in Prices
• Protection of Profit margin – if one hedges, he fixes his price & hence any price fluctuation does not affect his profit
• Hedging of Inventory – e.g. If one has the stock of 5kgs., he can sell futures & thereby minimize the risk
• Accessible to all bullion physical participants
DID YOU KNOW ?
GLOBAL ECONOMIC UNCERTAINTIES KEEP COMMODIT Y PRICES HIGHLY VOLAT ILE. USE FUTURES TO LOCK IN YOUR PRICES.
13
PRICE FIXED - RETAILER / JEWELLERS
A retailer receives an order of 1kg Gold Ornament with price fixed @ Rs. 48,000 / 10gms (Buy MCX – Rs. 47,800 / 10 gm) on 1st
Jan. He has put forward following facts to devise hedging strategy to lock raw material prices -
• Purchases gold to make jewellery after 20 days, on 20th Jan.
• After 10 days, retailer delivers the jewellery to the consumer.
Hence, difficult to predict gold prices ahead. (Rs. Per 10 gram)
SPOT FUTURES CASH FLOW
NET REALIZED
DATE FROM
ACTION PRICE ACTION PRICE SALE VALUE
FUTURES

1st Jan Sell 48000 Buy 47800

48,000 i.e.
20th Jan Buy 47,600 Sell 47400 400
(47,600 + 400)
48,000 i.e.
20th Jan Buy 48,400 Sell 48200 400
(48,400 – 400)

Due to Hedging, Gold Price is fixed at Rs. 48,000 i.e. spot price on Day 1

DID YOU KNOW ?

GLOBAL ECONOMIC UNCERTAINTIES KEEP COMMODIT Y PRICES HIGHLY VOLAT ILE. USE FUTURES TO LOCK IN YOUR PRICES.
PRICE NOT FIXED - RETAILER / JEWELLERS
A retailer receives an order of 1kg Gold Ornament with order price not fixed on 1st Jan. He has put forward following facts to
devise hedging strategy to lock raw material prices -
• Purchases gold to make jewellery after 20 days, on 20th Jan @ Rs. 48,000 (Sell MCX – Rs. 47,800 / 10 gm)
• After 10 days, retailer delivers the jewellery to the consumer.
Hence, difficult to predict gold prices ahead. (Rs. Per 10 gram)
SPOT FUTURES CASH FLOW
NET REALIZED
DATE FROM
ACTION PRICE ACTION PRICE SALE VALUE
FUTURES
1st Jan No Action No Action No Risk & No impact

20th Jan Buy 48,000 Sell 47,800

48,000 i.e.
30th Jan Sell 47,600 Buy 47,400 400
(47,600 + 400)

48,000 i.e.
30th Jan Sell 48,400 Buy 48,200 400
(48,400 – 400)
Due to Hedging, Gold Price is fixed at Rs. 48,000 i.e. spot price on Day 20
DID YOU KNOW ?
GLOBAL ECONOMIC UNCERTAINTIES KEEP COMMODIT Y PRICES HIGHLY VOLAT ILE. USE FUTURES TO LOCK IN YOUR PRICES.
ILLUSTRATION – PRICE FIXED
An Order of 1kg Gold Ornament received with price fixed @ Rs. 48,000 / 10gms. (Buy Gold Futures – Rs. 47,800 / 10gms.)

After 10 Days EXPOSED TO PRICE RISK

Purchase gold to make jewellery (Sell Gold Futures)
After 20 Days
Deliver the jewellery to the client
Scenario 1: Price (Rs. Per 10gms) Scenario 2: Price (Rs. Per 10 gms)
Particulars SPOT FUTURES SPOT FUTURES
At the time of Order 48,000 (SELL) 47,800 (BUY) 48,000 (SELL) 47,800 (BUY)
Purchase of Gold for making Jewellery 47,600 (BUY) 47,400 (SELL) 48,400 (BUY) 48,200 (SELL)
Effect 400 400 400 400
Net Effect 0 0
Price Locked 48000 48000
Due to Hedging, Gold Price is fixed on Day 1 when fixed price order is received
DID YOU KNOW ?
GLOBAL ECONOMIC UNCERTAINTIES KEEP COMMODIT Y PRICES HIGHLY VOLAT ILE. USE FUTURES TO LOCK IN YOUR PRICES.
ILLUSTRATION – PRICE UNFIXED
An Order of 1kg Gold Ornament received with price not fixed

After 10 Days
Purchase gold to make jewellery @ Rs. 48,000 / 10 gms (Sell Gold Futures at Rs. 47,800 / 10 gms)

After 20 Days EXPOSED TO PRICE RISK

Deliver the jewellery to the client (Buy Gold Futures)
Scenario 1: Price (Rs. Per 10gms) Scenario 2: Price (Rs. Per 10 gms)
Particulars SPOT FUTURES SPOT FUTURES
Purchase of Gold for making Jewellery 48,000 (BUY) 47,800 (SELL) 48,000 (BUY) 47,800 (SELL)
Delivers the jewellery to the client 47,600 (SELL) 47,400 (BUY) 48,400 (SELL) 48,200 (BUY)
Effect (Rs. Per 10 gms) 400 400 400 400
Net Effect (Rs. Per 10 gms) 0 0
Price Locked 48,000 48,000

Due to Hedging, Margins are fixed on Day 10 when actual gold is purchased.
DID YOU KNOW ?
GLOBAL ECONOMIC UNCERTAINTIES KEEP COMMODIT Y PRICES HIGHLY VOLAT ILE. USE FUTURES TO LOCK IN YOUR PRICES.
 GOLD PRODUCTS

2200
Price Movement 59000
Gold Gold Mini Gold Guinea Gold Petal 55000
2000
Regular Ahm. 51000
Ahm. Mum. Comex Gold Near Month

Dollar per Troy Ounce

1800 47000
Ahm.

Rs per 10 gram
MCX Gold Near Month 43000
1600 39000
35000
Quote = 10 gms Quote = 10 gms Quote = 8 gms Quote = 1 gms 1400
31000
Lot Size 1Kg +/- Lot Size 100 gms Lot Size 8 gms Lot Size 1 gms 1200 27000
Rs. 100/tick +/- Rs. 10/tick +/- Rs. 1/tick +/- Rs. 1/tick 23000
1000
19000
800 15000
Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18 Jul-19 Jul-20 Jul-21
60.00 60,000
Volatility 2016 2017 2018 2019 2020 2021 VOLUME & PRICE
50.00 55,000
Gold 15% 9% 9% 12% 19% 14%
50,000
40.00

Price (Rs./ Lots)

Volume in Lots

Gold Volume (In MT) (L) Price (R) 45,000

30.00
40,000
20.00
35,000

10.00 30,000

- 25,000
Jul-16 Dec-16 May-17 Oct-17 Mar-18 Aug-18 Jan-19 Jun-19 Nov-19 Apr-20 Sep-20 Feb-21 Jul-21

MCX Bullion Futures- High liquidity, low impact cost, depth of order book, high open interest – all indicators of hedging efficiency
18
GOLD : CONTRACT SPECIFICATIONS
GOLD REGULAR GOLD MINI GOLD GUINEA GOLD PETAL
Contract Months Feb., Apr., Jun., Aug., Oct. & Dec. Jan. to Dec. (monthly contract)
Expiry Date 5th of the Contract month Last day of the contract expiry month
Trading Unit 1 Kg 100 gms 8 Grams 1 Gram
Quotation 10 grams 10 grams 8 Grams 1 Gram
Price quote Ex-Mumbai for Gold Petal & Ex-Ahmedabad for rest (inclusive of all taxes & levies relating to import duty, customs but excl. GST, any
other additional tax, cess, octroi or surcharge as may be applicable)
Tick size Re. 1
Daily Price Limit The base price limit will be 3%
Initial Margin Minimum 6% or based on SPAN whichever is higher
Staggered Delivery The staggered delivery tender period would be the last 5 trading days (including expiry day) of the contracts.
Tender Period (Trading day will be based on availability for trading of the respective commodity on a trading day and excluding special sessions like Muhurat Trading day)
th
Delivery period margin 5% incremental margin till the 5 25% on marked quantity
Delivery Unit 1Kg 100 grams 8 grams 1 gram
Delivery logic Compulsory
Delivery Center Ahmedabad & Additional centers: Mumbai, Delhi, Hyderabad, Ahmedabad & Additional Mumbai & Additional centers:
Bengaluru, Kolkata, Chennai & Kochi centers: Mumbai & Delhi Ahmedabad & Delhi
Quality Specification 995 purity 999 purity
Spot price for Gold (10gms) (Ahmd. For Gold Guinea and Mumbai
Due Date Rate Simple Avg. of last 3 days spot price at Ahmd. for Gold Petal) polled on the last day of contract expiry by around
5.00pm, converted for 999 purity & 8 gms. / 1 gm. as case may be.

19
SILVER PRODUCTS
Silver Price Movement
80000 35

COMEX Silver (Dollar/Troy Ounce)

70000 30
Silver Regular Silver Mini Silver Micro MCX Silver Futures Near Month COMEX Silver Futures Near Month

MCX Silver (Rs/Kg)

60000 25

50000 20

40000 15

Quote = 1 Kg Quote = 1 Kg Quote = 1 g 30000 10

Lot Size 30 Kg Lot Size 5 Kg Lot Size 1 Kg 20000 5
+/- Rs. 30/tick +/- Rs. 5/tick +/- Rs. 1/tick Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18 Jul-19 Jul-20

6000
VOLUME & PRICE 78000

5000 Silver Volume (In MT) (L) 73000

68000
Price (R)
4000
Volume in Lots

63000

Price (Rs./ Lots)

58000
3000
53000
2000 48000

43000
1000
38000

0 33000
Jul-16 Dec-16 May-17 Oct-17 Mar-18 Aug-18 Jan-19 Jun-19 Nov-19 Apr-20 Sep-20 Feb-21 Jul-21

20
SILVER : CONTRACT SPECIFICATIONS
SILVER SILVER MINI SILVER MICRO
Contract Months Mar, May, July, Sept & Dec. Feb, April, June, Aug & Nov
Expiry Date 5th of the Contract month Last day of the contract expiry month
Trading Unit 30 Kgs 5 Kgs 1 Kgs
Quotation base 1Kgs 1Kgs 1Kgs
Price quote Ex-Ahmedabad (incl. of all taxes and levies relating to import duty, customs but excl. GST, any other additional tax, cess,
octroi or surcharge as may be applicable)
Tick size Re. 1
Daily Price Limit The base price limit will be 4%
Initial Margin Minimum 10% or based on SPAN whichever is higher
Staggered Delivery Tender The staggered delivery tender period would be the last 5 trading days (including expiry day) of the contracts.
Period (Trading day will be based on availability for trading of the respective commodity on a trading day and excluding special sessions like Muhurat Trading day)
Delivery Period Margin Delivery period margins shall be higher of: a. 3% + 5 day 99% VaR of spot price volatility Or b. 25%
Delivery Unit 30 Kgs 5 kg (five nos. of 1Kg Bars) 1 Kg
Delivery Logic Compulsory Compulsory Compulsory
Ahmedabad & Additional centers:
Delivery Center Mumbai, Delhi, Chennai, Agra, Salem, Ahmedabad
Rajkot & Jaipur
Quality Specification 999 fineness (Serially numbered Silver bars supplied by LBMA approved suppliers)

Due Date Rate Simple Avg. of last 3 days spot price at Ahmedabad

21
DELIVERY SETTLEMENT TIMELINE (EXPIRY (E))

E
E-4 to E

E+1

E+1

E+3

E+5
2:00 p.m.: Delivery Buyers Seller
Tender Period pay-in of Commodities member to Member to
Fixation of Delivery Period & Funds pay-in for submit details arrange for
Margin (TP)* -
DDR & Margin (DP)* - delivery bought of registered Invoice in
5%
Higher of 3% + 5 buyers/ favour of
incremental Delivery 4:00 p.m.: Delivery
day 99% VaR of clients in the Buyer
margin on Allocation at pay-out of
spot price favour of member/cl
each day Final DDR Commodities & Funds
volatility or 25% whom the ient and to
Open position payout for tendered invoice needs send soft
delivery to issued copy

* Sellers are exempt from TP and DP margin, if goods are tendered as ‘Early Pay-In’ with all the documentary evidences
Buyer & Seller
* Refer MCX Circular No. MCX/MCXCCL/579/2020 & MCXCCL Circular No. MCXCCL/C&S/187/2020 dated August 12, 2020
MCX Circular No. MCX/MCXCCL/690/2020 & MCXCCL Circular No. MCXCCL/C&S/220/2020 dated September 21, 2020 for
Revised timeline for submission of Original invoice/Delivery related documentation
DID YOU KNOW ?
GLOBAL ECONOMIC UNCERTAINTIES KEEP COMMODIT Y PRICES HIGHLY VOLAT ILE. USE FUTURES TO LOCK IN YOUR PRICES.
Process For Deposits In Warehouse (BASE METALS)
Seller deposits Goods in warehouse Deliveries through
MCX designated preferably atleast 2 days prior to its expected
Warehouse /Vaults delivery day

Submit KYD & DTD, Packing list containing net # Goods should have producer’s sticker
and gross weight & batch no. reflecting producer name, net weight,
batch no, purity, no. of pieces in bundle &
Visual inspection along with the date of manufacturing
# Alternatively, for Aluminium & Zinc the
supporting documentation* material having batch detail of the lot
printed with laser / Stencil and coming
Pre-Staggered directly from manufacturer’s facility or
Delivery Tender On approval, Seller to submit WR & QC for
directly from Port in case of Import shall
Day Event commodity pay-in with endorsed WR
also be accepted

Post-Staggered
Seller to raise commercial invoice on Delivery Tender
buyer Day Event
* Documentation for Deposit -
• CoA of the producer with details like
Brand name, Producer’s name, Batch
No & certificate date Buyer to register with the relevant Buyer to lift the goods and
• Copy of Invoice
authorities and provide registration pay storage and loading &
• For Imported Goods: Certificate of
Origin & Custom clearance documents details for invoicing unloading charges
PROCESS FOR DEPOSITS IN VAULTS
MCXCCL designated
designated Seller submit deposit request in
MCXCCL ComRIS/CCRL
Warehouse // Vaults
Warehouse Vaults
DELIVERIES THROUGH
Submit KYD & supporting documents

Seller deposits Goods in warehouse /

vaults
INVENTORY & SPACE UTILIZATION
Visual inspection / Quality Testing
DETAILS

eWR/eNWR created. Seller to submit https://www.mcxccl.com/wareho

Pre-Expiry Event
eWR for commodity pay-in in COMRiS using-logistics/stock-position
/ CCRL
After Commodity pay-out, Buyer to
Post-Expiry Event
WAREHOUSING CHARGES register with the relevant authorities and
https://www.mcxccl.com/ware provide details for invoicing
Buyer to lift the goods and
housing-logistics/Overview pay storage and loading &
Seller to raise Invoice on buyer
unloading charges
DID YOU KNOW ?
OPTIONS ARE AKIN TO PRICE INSURANCE, AS BUYER ONLY PAYS ONE -TIME UPFRONT FEE (PREMIUM) AND IS FREE FROM DAILY MARGIN CALLS.
FOR DAILY REFERENCE PRICE & FSP: PRICE POLLING
• Reference spot prices is for better pricing decisions by participants and used for determining delivery
price
SPOT PRICE POLLING AT MCXCCL
• Spot market prices are polled twice a day & single reference price* disseminated to the market at ~
12pm & 5pm on TWS and MCX & MCXCCL website. (*arrived based on Trim-Mean method)
• Final Settlement Price (FSP) of all the deliverable contracts is an average of 3 days evening spot price
• FSP of respective month contract will be used for billing and GST calculation
• Spot Prices available at - https://www.mcxindia.com/market-data/spot-market-price &
https://www.mcxccl.com/spot/spot-market-price

25
VAULTS & CHARGES
Commodity Delivery Center Vaults Storage Charges

Ahmedabad, Delhi, Mumbai, Bengaluru,

M/s Brink’s India Private Limited Rs. 35.00 per Kg per day
Chennai, Cochin, Hyderabad
for Gold
Gold & Gold
Ahmedabad, Delhi, Mumbai, Bengaluru, &
Mini M/s Sequel Logistics Pvt. Ltd.
Chennai, Cochin, Hyderabad, Kolkata Rs. 3.50 per 100 gms per
day for Gold Mini
Ahmedabad Malca-Amit JK Logistics Pvt. Ltd.

M/s Brink’s India Private Limited Rs. 0.10 per 8 gms per day
Gold Guinea & Ahmedabad, Delhi, Mumbai for Gold Guinea and Rs.
M/s Sequel Logistics Pvt. Ltd.
Gold Petal 0.10 per 1 gm per day for
Ahmedabad Malca-Amit JK Logistics Pvt. Ltd. Gold Petal
Additionally, transaction charge of up to Rs. 300/- per deposit or withdrawal (exclusive of applicable Taxes) shall be payable directly to the vaulting agency
Stock position in the accredited warehouses - https://www.mcxccl.com/warehousing-logistics/stock-position
For more information - https://www.mcxccl.com/warehousing-logistics/Overview

DID YOU KNOW ?

BASE METAL DERIVATIVE CONTRACTS ARE NOW PHYSICALLY DELIVERABLE
VAULTS & CHARGES
Commodity Delivery Center Vaults Storage Charges
Ahmedabad, Agra, Chennai, Delhi, Jaipur,
M/s Brink’s India Private Limited
Mumbai, Salem

Rs. 35.00 (upto 90 days) &

Ahmedabad, Agra, Chennai, Delhi, Jaipur,
M/s Sequel Logistics Pvt. Ltd. Rs.45.00 (91 days &
Silver Mumbai, Salem, Rajkot
above) per 30 Kg per day

Ahmedabad Malca-Amit JK Logistics Pvt. Ltd.

Silver Mini
M/s Brink’s India Private Limited Rs. 1.25 (upto 90 days) &
Ahmedabad M/s Sequel Logistics Pvt. Ltd. Rs. 1.50 (91 days & above)
Silver Micro Malca-Amit JK Logistics Pvt. Ltd. per 1 Kg bar per day

Additionally, transaction charge of up to Rs.300/- per deposit or withdrawal (exclusive of applicable Taxes) shall be payable directly to the vaulting agency
• Loading and unloading charges are Rs. 15/- per Silver Bar and shall be levied for depositing & lifting of the delivery.
Stock position in the accredited warehouses - https://www.mcxccl.com/warehousing-logistics/stock-position
For more information - https://www.mcxccl.com/warehousing-logistics/Overview

DID YOU KNOW ?

BASE METAL DERIVATIVE CONTRACTS ARE NOW PHYSICALLY DELIVERABLE
 BULLION DELIVERIES

MCX Bullion - Delivery Volume (MT)

Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Total

Gold 0.4 2.6 7.2 6.2 4.9 10.2 12.8 7.6 7.9 14.8 11.2 5.9 5.6 4.5 3.6 9.2 4 7 125

Silver 15 131 148 208 301 248 86 267 314 284 137 251 360 117 241 202 409 252 3973

# till July 5, 2021

Deliveries of 125 MT of Gold & and over 3973 MT of Silver have taken place on MCX since inception.
Gold: 5.158 MT in August 2019 (highest ever in a single contract)
Silver: 140 MT in September 2020 (12 year high)
The newly designed one gram gold future contract (first ever deliverable one gram gold contract in the world) saw successful
delivery of 42.5 kg (42507 coins) since it’s launch in October 2019.
Silver (1kg) Micro contract that became deliverable with Silver one kilogram bar as delivery lot from February series, saw
successful delivery of 27055 kg.
Silver (5 kg) Mini contract that became deliverable with Silver five no. of one kilogram bars as delivery lot from June series, saw
successful delivery of 43855 kg.
WHAT ARE OPTIONS ON FUTURES?
• Options offer the buyer an Insurance against adverse movement, but allow for participation on favourable side

• Maximum Loss to the extent of Premium paid for Buyer

• Exchange Traded options free from counter party risk

• Futures & Options combination (both risk management tools): gives leverage of futures with safety of options:
Profit from change in future prices but limit losses via Options
• Participants can devise hundreds of effective hedging strategies

• Better Cash-flow management-one-time payment of Premium

• Low Transaction Cost, low capital intensive

CALL OPTION PUT OPTION

Option Buyer Pays Premium; right to buy Pays Premium; right to sell
Option Seller Collects premium; obligation to sell Collects premium; obligation to buy

DID YOU KNOW ?

HEDGE | DISCLOSE | BE COMPLIANT - LISTED ENTITIES TO DISCLOSE COMMODIT Y PRICE RISK & HEDGING ACTIVITIES IN ANNUAL REPORT (SEBI-LODR)
OPTION TERMINOLOGY
• Option price: Option price is the price which the option buyer pays to the option seller. It is also referred to as the
option premium.

• Expiration date: The date specified in the options contract is known as the expiration date, the exercise date, the
strike date or the maturity.

• Strike price: The price specified in the options contract is known as the strike price or the exercise price.

• Open interest: The total number of options contracts outstanding or open in the market at any given point of time.
MONEYNESS IN OPTIONS CALL OPTION PUT OPTION
In the Money Current Price > Strike Price Current Price < Strike Price Close to Money (CTM)
At the Money Current Price = Strike Price ATM & 2 strike prices
above & below ATM
Out of the Money Current Price < Strike Price Current Price > Strike Price

• Intrinsic Value: Amount by which the option is in the money Call Option Current Price - Strike Price
i.e. difference between strike price and current price Put Option Strike Price - Current Price
SETTLEMENT TIMELINE EXPIRY (E)
UNDERLYING FUTURES GOLD (1 KG) AND GOLD MINI (100 GRAMS) SILVER (30 KG) AND SILVER MINI (5 KG)
EXPIRY DAY 3 business days prior to the first business day of Tender Period of underlying
UNDERLYING PRICE
Ex-Ahmedabad (incl. taxes & levies relating to import duty, customs but excl. other taxes)
QUOTE
EXERCISE STYLE European Style options
• 25 each for ITM & OTM • 25 each for ITM & OTM
STRIKE INTERVAL
• 1 for ATM • 1 for ATM
STRIKE PRICE 100 250
TICK SIZE 0.50 0.50
DAILY PRICE LIMIT The upper & lower price band as determined based on Black76 model, relaxed considering the movement in the underlying
• Upfront Premium blocked for the buyer
• Price Scan Range – 3.5 Standard Deviation (3.5 sigma), Volatility Scan Range – Minimum 6% or as decided by MCXCCL from time to time.
MARGINS For applicable VSR refer latest circulars issued by MCXCCL, Extreme Loss Margin – Minimum 1% The Short Option Minimum Margin
(SOMM) and Margin Period of Risk (MPOR) shall be in accordance with SEBI Circular no. SEBI/HO/CDMRD/DRMP/CIR/P/2020/15 dated
January 27, 2020. For applicable SOMM and MPOR refer latest circulars issued by MCXCCL from time to time
POSITION LIMITS 2 x Position limits for futures contracts provided
• Options Premium settlement on T+1 day basis
DAILY SETTLEMENT
• MTM on Options positions to be adjusted with margin requirement. MTM gains and losses would not be settled in cash
On exercise, Options positions devolve into underlying Futures position (open at the strike price)
SETTLEMENT • long call position & short put position devolve into long position in the underlying futures contract
DID YOU KNOW ? DID YOU KNOW ?
• long put position & short call position devolve into short position in the underlying futures contract
FOR PRICE UPDATES, DOWNLOAD MCX APP FROM PLAYSTORE / APPSTORE FOR TRADE VERIFICATION : VISIT – HTTPS://WWW.MCXINDIA.COM
EXERCISE MECHANISM *
OPTION SERIES MEANING EXERCISE MECHANISM
At the Money Strike price closest to the Daily Settlement Price (DSP) of
(ATM) underlying Futures contract
In the money Except those belonging to ‘CTM’ option series & options Exercised automatically, unless ‘contrary
(ITM) are ‘In the Money’ instruction’ has been given by long position
holders by 11:45 p.m. / 12:10 p.m. through
Exchange TWS #

Out of the money Except those belonging to ‘CTM’ option series & options Expire worthless
(OTM) are ‘Out the Money’

All exercised contracts shall be assigned to short positions in that series in a non-preferential manner.
# Can submit contrary instructions by uploading ‘Ex-DEx Intimation file’ on member’s SFTP till 12:20 a.m. on expiry day or within 30
minutes from the time of export of ‘Ex-DEx Intimation file’ to members on their SFTP/Date folder, whichever is later.
*SEBI Guidelines on “Product Design and Risk Management Framework”
DID YOU KNOW ?
OPTIONS ARE AKIN TO PRICE INSURANCE, AS BUYER ONLY PAYS ONE -TIME UPFRONT FEE (PREMIUM) AND IS FREE FROM DAILY MARGIN CALLS.
OPTIONS DEVOLVEMENT
(EXPIRY (E) & DEVOLVEMENT TO FUTURES – E+1)

E-2 to E

E-1 to E
E-4 to E-1

E+1

E+1 to E+2

E+2

E+4
Balance IM
Excess OI in
M2M gain / Options to be
Explicit loss
Devolvement reduced to Earliest Start of
Sensitivity Intimation
Margin (upto CTT on allowed OI Margin Tender
Report for ATM &
25% & 50%) Premium * limits in Payout Period
CTM
underlying
CTT on Futures
Exercise *

* CTT on Premium (sellers of call / puts) 0.05%

CTT on Exercise (buyers of call / puts) 0.0001%

DID YOU KNOW ?

BASE METAL DERIVATIVE CONTRACTS ARE NOW PHYSICALLY DELIVERABLE
PROTECTING INVENTORY – FIXED GOLD
P&L Payoff at Expiration Matrix
Bullion Dealer:
Risk of
(Premium -480)
depreciation in Underlying Payoff Net PAYOFFS FROM OPTIONS
Gold Physical
(CMP 48000)
Price At from Profit /
Stock 300 Payoff from options
Expiry options Loss
Net Profit/Loss
200
47300 220 -700 -480
100
47400 120 -600 -480
Prices Buy Put option: Prices 0
Strike price
47500 20 -500 -480
-100
48000 Premium 47600 -80 -400 -480
-200
Rs.480 47700 -180 -300 -480
-300
47800 -280 -200 -480
-400
Profit : Actual
47900 -380 -100 -480
-500
loss is 48000 -480 0 -480
-600
Loss : Max. compensated 48100 -480 100 -380
up to Rs.480 by appreciation
in the premium 48200 -480 200 -280
price 48300 -480 300 -180

Having hedge through options Bullion dealer protect himself against downside risk and also avails
opportunity profit if prices go beyond 48480/- in physical markets
DID YOU KNOW ?
YOU CAN DIVERSIFY YOUR PORTFOLIO WITH COMMODITIES DERIVATIVES - BULLION | BASE METAL | ENERGY | AGRI
PROTECTING INVENTORY – UNFIXED GOLD
P&L Payoff at Expiration Matrix
Exporter : Risk
of appreciation
(Premium - 480)
in Gold post
PAYOFFS FROM OPTIONS
Underlying Payoff Net
receiving order Physical 300
(CMP 48000)
Price At from Profit / Payoff from options
Stock
Expiry options Loss 200 Net Profit/Loss

100
47300 -480 700 220
47400 -480 600 120 0
Prices Buy Call option Prices
Strike price
47500 -480 500 20 -100

48000 47600 -480 400 -80 -200

Premium Rs.480 47700 -480 300 -180 -300

47800 -480 200 -280 -400

Profit : Actual
47900 -480 100 -380 -500

loss is 48000 -480 0 -480 -600

Loss : Max. compensated 48100 -380 -100 -480
up to Rs.480 by appreciation
in the premium 48200 -280 -200 -480
price 48300 -180 -300 -480
Having hedge through options Jeweler protect himself against upside risk and also avails opportunity profit if
prices break below 47520 in physical markets

DID YOU KNOW ?

HEDGE | DISCLOSE | BE COMPLIANT - LISTED ENTITIES TO DISCLOSE COMMODIT Y PRICE RISK & HEDGING ACTIVITIES IN ANNUAL REPORT (SEBI-LODR)
TAXATION-ON EXERCISE OF GOLD & SILVER OPTIONS
Gold 1 kg Options contract Silver 30 kg Options contract
Notional value = ₹ 48 lakh Notional value = ₹ 21 lakh
Transaction Taxes
Option premium = ₹ 48,000 (@ 1% of Option premium = ₹ 21,000 (@ 1% of
notional value) notional value)
Call Option Put Option Call Option Put Option
Particulars
Buyer Seller Buyer Seller Buyer Seller Buyer Seller
CTT on premium (@ 0.05% of premium – Seller) 24 15 10.5 10.5
CTT on exercise (@ 0.0001% of FSP* – Buyer) 4.8 4.8 2.1 2.1
On conversion of option position to futures position
- 480 480 - - 210 210 -
on exercise (@ 0.01% on futures position – Seller)

If chooses not to take physical delivery, but squares

480 - - 480 210 - - 210
position in futures
Total Transaction Taxes 484.8 504 484.8 504 210.1 220.5 210.1 220.5
#Transaction fees on Options Contracts are waived till September 30, 2021.
Note : For details, kindly refer exchange Circular No. MCX/TRD/188/2021 , dated March 25, 2021
 SEBI
UPDATES

37
SEBI NEW INVESTOR WEBSITE -
HTTPS://INVESTOR.SEBI.GOV.IN
 NEW ONLINE DISPUTE RESOLUTION (ODR)
MECHANISM

• SEBI has directed all the MIIs to establish a common Online Dispute Resolution Portal
(ODR Portal) for online conciliation and arbitration to resolve disputes arising in the
securities market.
• Ref. SEBI Circular SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/145 dated August 11, 2023.
• All MIIs have developed a Common ODR Portal - SMARTODR.
• An investor initially shall approach his/her respective Trading Member to lodge a
complaint directly with them. Exchange will guide the investor about the process.
• MCX has empanelled “Lex Carta Private Limited (JustAct)” as primary Online Dispute
Resolution(ODR) service provider.
• The first and second phase process has been made live from August 16, 2023 and
September 16, 2023 respectively.
• To register a complaint on SMARTODR Portal, investor/client can visit
https://smartodr.in/login
NEW ONLINE DISPUTE RESOLUTION MECHANISM AT
EXCHANGE
DO’S AND DON'T
DO’S AND DON'T
 • Choose the Member Broker
HOW CAN YOU PARTICIPATE ON EXCHANGE
• Fulfill KYC at Broker level

• Arrange for minimum initial margin requirement

o Update yourself on Mark-to-Margin requirements

• Know Exchange regulations and byelaws

• Select the commodity/ product to trade

• Read the Dos and Don’ts

• Know and distinguish among:

o Brokerage and Transaction Charges
o Margins, Taxation and Stamp Duty
o Default Penalties and Arbitration

DID YOU KNOW ?

OPTIONS ARE AKIN TO PRICE INSURANCE, AS BUYER ONLY PAYS ONE -TIME UPFRONT FEE (PREMIUM) AND IS FREE FROM DAILY MARGIN CALLS.
 DO’S & DON'TS

DO’s DON’TS
• Trade only through Registered Members • Do not be influenced by indicative returns or promises made
of the Exchange - visit Exchange website • Do not get carried away by luring advertisements, rumors, hot
to check if the member is registered with tips
Exchange • Do not make payments in cash/take any cash towards margins
• Fill standard 'Know Your Client’ (KYC) and settlement
form before you commence trading • Do not sign blank DPs while furnishing securities deposits
• Update your mobile number and/or • Do not pay brokerage in excess of the rates prescribed by the
email id with your broker & insist your Exchange
broker to upload the same in the WHO IS A RESPONSIBLE INVESTOR..???
exchange’s UCC database. • Tracks the physical market
• Insist on getting a Unique Client Code • Tracks the economy – global and local
(UCC) and ensure all your trades are • Knows his financial limits and risk profile
done in UCC • Doesn’t bet on the market but takes informed decisions
• Insist on reading the standard 'Risk • Doesn’t (over-trade) try to recoup losses, it might lead to more
Disclosure Document (RDD)’ & ‘Rights & losses
Obligation of Investor’ • Continuously track his/her positions

DID YOU KNOW ?

OPTIONS ARE AKIN TO PRICE INSURANCE, AS BUYER ONLY PAYS ONE -TIME UPFRONT FEE (PREMIUM) AND IS FREE FROM DAILY MARGIN CALLS.
 MEDIUMS - EDUCATE & PROTECT INVESTORS
NEWSLETTERS, HEDGING BROCHURES,
MANUALS, OPTION PRIMER

VIDEO CLIPS
Introduction to Options - https://youtu.be/-xsQmcys7to
Basics on Commodity Options (English) - https://youtu.be/7Dmdxb8vpjQ
Basics on Commodity Options (Hindi) - https://youtu.be/BSLyRIGaifQ
Basics of Commodity Futures - https://youtu.be/8s7rhXbqCP4
Base Metal Deliverable Contracts - https://youtu.be/Y-tY5fCM2JQ

Contact for any queries: 022 - 6649 4040

DID YOU KNOW ? DID YOU KNOW ?

FOR PRICE UPDATES, DOWNLOAD MCX APP FROM PLAYSTORE / APPSTORE FOR TRADE VERIFICATION : VISIT – HTTPS://WWW.MCXINDIA.COM
DID YOU KNOW ? DID YOU KNOW ?
FOR PRICE UPDATES, DOWNLOAD MCX APP FROM PLAYSTORE / APPSTORE FOR TRADE VERIFICATION : VISIT – HTTPS://WWW.MCXINDIA.COM
DID YOU KNOW ? DID YOU KNOW ?
FOR PRICE UPDATES, DOWNLOAD MCX APP FROM PLAYSTORE / APPSTORE FOR TRADE VERIFICATION : VISIT – HTTPS://WWW.MCXINDIA.COM
 THANK YOU
Disclaimer: The Contents do not constitute professional advice or provision of any kind of services and should not be relied upon as
such. MCX does not make any recommendation and assumes no responsibility towards any investments/trading in commodities or
commodity futures done based on the information given in the website and any such investment/trade are subject to
investment/commercial risks for which MCX shall not be responsible. If financial, investment or any other professional advice is
required, please seek advice of competent professionals.

DID YOU KNOW ?

MCX IS A MEMBER OF : OICU-IOSCO | FUTURES INDUSTRY ASSOCIATION (FIA) | WORLD FEDERATION OF EXCHANGES (WFE)
50
51
 10,500
11,500
12,500
14,500
13,500

6,500
7,500
8,500
9,500
31-Dec-2015
22-Jan-2016
16-Feb-2016
9-Mar-2016
1-Apr-2016
25-Apr-2016

DID YOU KNOW ?

17-May-2016
8-Jun-2016

Returns (𝑹𝒑 ) =
𝑽𝒐𝒍𝒂𝒕𝒊𝒍𝒊𝒕𝒚 (𝝈𝒑 ) =
30-Jun-2016
22-Jul-2016
16-Aug-2016
Correlation: 0.09274

7-Sep-2016
29-Sep-2016
21-Oct-2016

σn𝑖=1 𝑊𝑖
11-Nov-2016
5-Dec-2016
27-Dec-2016
18-Jan-2017

× 𝑅𝑖
10-Feb-2017
6-Mar-2017

𝑤12 𝜎12 + 𝑤22 𝜎22 + 2𝑤1 𝑤2 𝜎1 𝜎2 𝜌12

28-Mar-2017
20-Apr-2017
12-May-2017
5-Jun-2017
PORTFOLIO DIVERSIFICATION

27-Jun-2017
19-Jul-2017
10-Aug-2017

𝜎p
𝑅p
4-Sep-2017
26-Sep-2017
19-Oct-2017
10-Nov-2017
(since Nov ’18)

4-Dec-2017
Performance

27-Dec-2017
18-Jan-2018
12-Feb-2018
6-Mar-2018

BASE METAL DERIVATIVE CONTRACTS ARE NOW PHYSICALLY DELIVERABLE

28-Mar-2018
BULLION INDEX & NIFTY 50 COMPARISON

20-Apr-2018
Nifty

14-May-2018
(100%)

31.03%
-20.75%

5-Jun-2018
Sharpe Ratio -86.20%

27-Jun-2018
19-Jul-2018
10-Aug-2018
4-Sep-2018
26-Sep-2018
19-Oct-2018
+

12-Nov-2018
(10%)

4-Dec-2018
28.16%
-15.20%

27-Dec-2018
-75.30%
BULLDEX
Nifty (90%)

18-Jan-2019
11-Feb-2019
6-Mar-2019
29-Mar-2019
24-Apr-2019
17-May-2019
10-Jun-2019
2-Jul-2019
BULLION INDEX

(25%)

24-Jul-2019
-6.88%
23.16%

16-Aug-2019
-54.37%

9-Sep-2019
Nifty (75%)
+ BULLDEX

1-Oct-2019
24-Oct-2019
14-Nov-2019
06-Dec-2019
31-Dec-2019
NIFTY 50

22-Jan-2020
Portfolios with Nifty & BULLDEX

12-Feb-2020
05-Mar-2020
27-Mar-2020
24-Apr-2020
6.98 %

6.01%
16.34%

18-May-2020
Nifty (50%) +
BULLDEX (50%)

52
Comparison with Equity Index

20000.00
NIFTY BULLDEX METLDEX ENRGDEX
18000.00

16000.00

14000.00

12000.00

10000.00

8000.00

6000.00

4000.00

2000.00

0.00
Dec 15 Apr 16 Aug 16 Dec 16 Apr 17 Aug 17 Dec 17 Apr 18 Aug 18 Dec 18 Apr 19 Aug 19 Dec 19 Apr 20 Aug 20 Dec 20 Apr 21 Aug 21

Index Correlation with NIFTY 50

BULLDEX -0.03

METLDEX 0.13

ENRGDEX 0.16
Note: data since inception till Aug'21

DID YOU KNOW ?

HEDGE | DISCLOSE | BE COMPLIANT : LISTED ENTITIES TO DISCLOSE COMMODIT Y PRICE RISK & HEDGING ACTIVITIES IN ANNUAL REPORT (SEBI-
LODR)
 KEY TAKEAWAYS

• What is Commodity?
• Why Commodity?
• Commodities as an asset class
• New opportunities (Options & Indices)

54
 THANK YOU
Disclaimer: The Contents do not constitute professional advice or provision of any kind of services and should not be relied upon as
such. MCX does not make any recommendation and assumes no responsibility towards any investments/trading in commodities or
commodity futures done based on the information given in the website and any such investment/trade are subject to
investment/commercial risks for which MCX shall not be responsible. If financial, investment or any other professional advice is
required, please seek advice of competent professionals.

DID YOU KNOW ?

MCX IS A MEMBER OF : OICU-IOSCO | FUTURES INDUSTRY ASSOCIATION (FIA) | WORLD FEDERATION OF EXCHANGES (WFE)
55