MCX's gold option goes live: Should you invest in it this Dhanteras?
Leading commodity bourses MCX launches first of its kind gold option trading for commodity lovers on the auspicious day of Dhanteras.
As the five-day Diwali festival kicks off with Dhanteras, the Multiple Commodity Exchange of India (MCX) has launched gold option trading.
On October 10, MCX stated that gold options trading will be available on a 1 kilogram gold futures contract. Traders will be able to hedge their risks at a fraction cost in options than compared to futures contracts.
Market regulator Securities and Exchange Board of India (Sebi) gave its approval for launch of gold options to MCX in the month of August 2017.
PK Singhal MCX whole-time director said, "We are hoping for good response from this trading options. Since the Commodity Transaction Tax (CTT) came into effect, our futures trading have now hovered near Rs 3,000 crore."
Singhal added, "We have already created an awareness campaign with jewellers in this regards, so we have been receiving good responses so far."
According to Singhal, before CTT, India's golds future contract used to witness Rs 20,000 crore to Rs 25,000 crore single-sided volume. Also, before CTT, our gold impact cost way lower than Comex.
However, Singhal stated that the impact of CTT is lower in options trading because less transaction cost and impact cost in comparison with futures trading.
MCX is quite optimistic on retail investors who might opt for this gold option as the risk involved is lower.