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Leading stock exchanges NSE and BSE, for the first time ever, will launch options contract on spot gold prices from June 8.
Currently, the leading commodity derivatives exchange MCX provides gold options trading which devolve on underlying futures contract.
BSE said it will launch gold mini and silver kg options from June 1.
In a separate note to investors, NSE said they have received approval from SEBI to launch options in goods contracts on underlying gold spot price, and Gold mini option contract would be available for trading in commodity derivatives segment with effect from June 8.
Three contracts expiring in June, July and August will be available for trading on the launch day.
The trading will be Mondays through Fridays between 9 am and 11:30 pm.
Ravi Varanasi, Chief Business Development Officer, NSE told BusinessLine that the product will be attractive for jewellers and bullion traders as they will be able to hedge risk at bare minimal cost and avail delivery on expiry of the contract.
Though the underlying market is closed due to Covid, the government exchange expects to attract some învestment demand including that of exchange traded fund before the industry bounces back to normal.
NSE has introduced market making in the gold options to provide liquidity in the initial days. The exchange has also received approval for launching silver options but will focus on gold options before taking up silver launch, said Varanasi.
Gold options
The gold options trading unit on NSE will be 100 grams and base value is Rs 10 grams. The maximum order size has been fixed at 10 grams while the delivery units are 100 grams and it is deliverable in Ahmedabad, Delhi, Mumbai and Chennai.
Meanwhile, MCX has upgraded its software to include negative pricing for all commodities.
Now, the system at the brokers and vendors end needs to be updated and moke trades will conducted before the exchange goes on to allow investors trade live on negative pricing.
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