Commodity Options expiry settlements


Though it’s getting delayed, the inclusion of “option trading” feature in COMMODITY segment is a very welcome move. When it comes to settlement in commodity options, it is risky one. The main reason being “LIVE SPOT” is not traded in MCX and NCDEX as in the case of NSE. In NSE, FUTURE and OPTION settlement is completely based on LIVE SPOT. While it is very difficult to accurately arrive at the settlement without LIVE SPOT trading (in COMMODITY).


As of now, MCX has announced that settlement is based on FUTURE alone. Also it stated, on the day of EXPIRY: all the OPTIONS will be converted into FUTURE. All this may still lead to more confusion. At the same time, VOLUME in both MCX and NCDEX may increase. So it is reasonable that many confusion will arise during the initial period of commodity option. It may take a year to have a clear picture of all the rules and settlement. Until then, we will wait!!

Updated: June 27, 2017 — 12:38 pm
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