India’s first gold options trading launched on MCX. According to Finance Minister, Arun Jaitley this is a big step to formalise yellow metal trading in the country. It is the country’s first gold options trading on the Multi Commodity Exchange (MCX). This may go well with the auspicious gold buying festival of Dhanteras.
India is the world’s second biggest buyer of gold. Around 800 tonnes of golds imports a year. This facility gives the traders the option of futures. Indians are great buyers of gold. This new Gold Options Trading will be extremely successful as per reports. Currently government is taking efforts to formalise gold trade.
2 types of MCX gold options and its working
- call option: This gives the buyer the right to buy the asset underlying the option at a fixed price on a predetermined date
- put Option: This confers the right to sell the asset similarly
As per MCX, gold options contracts are available for trading from today. In which investors can trade in one kg gold and the contracts will expire in November and January 2018. Gold buyers have the right to buy or sell an underlying asset at a specified price at the expiry.
Gold is used as an avenue of investment. This is mainly used as wedding gifts and to make religious donations. Mrugank Paranjape is the MCX Managing Director and CEO. There is no charging or transaction fee on this product till December as introductory offer.
A committee is set up by the finance ministry to transform India’s gold market. MCX is the leading commodity bourse which has a large presence in gold, base metals, and energy. This also has market share of over 90 per cent.