Sebi allows options in one commodity per exchange

The Securities and Exchange Board of India (Sebi) has issued a circular allowing commodity exchanges to launch options trading in commodities.  Initially, an exchange can launch options in only one commodity and the position limits for options will be double that of the respective futures contract. The settlement of commodity options will be complex as they become futures contracts on settlement. This mechanism has been introduced to allow option-holders to give or take delivery, which is not possible in the current legal framework. Future & Option Trading Tips

Sebi has also specified criteria for commodities to be allowed for options trading. The commodity must be among the top five by traded volume on an exchange and the daily average volume over the previous 12 months must be Rs 200 crore for agri and agri-processed commodities and Rs 1,000 crore for non-agri commodities. Exchanges are still deliberating on their choice of commodities because, as an industry source said, “the product being permitted for the first time, it is sensible to ensure it succeeds”. The NCDEX is prioritising soybean and the MCX gold.  Financial Astrology Tips