Tuesday, Jul 21, 2020

By Roshni Devi and Kavita Desai

MUMBAI – The National Commodity & Derivatives Exchange will seek the Securities and Exchange Board of India's approval to launch options in goods contracts for chana, guar seed, guar gum and soybean, after it discontinued options trade in futures contracts, an exchange official said.

"We are working to convert them (options in futures) into options in goods... There was not much liquidity in these options on futures contracts so market participants are not that worried. That's why we are moving from futures to goods," an exchange official said.

For settlement of options in futures contract, options devolve into futures first, and then futures are settled. In options in goods contracts, the basis for the settlement is the underlying spot market price and the contract is settled through compulsory delivery.

"Options in goods is easy because the trader can directly take delivery without having a position in the futures contract," the official said.

The exchange has already received the regulator's nod to launch options in goods contracts for mustard seed, wheat and maize, which will be available for trading from Monday.

He added that based on the response to these options in goods, the exchange will consider offering options in goods in other commodities too.  End

Edited by Mainak Moitra

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