What is the impact of Crude oil Options launch by MCX in Commodity Trading?

Did it fare well on the opening day?


The revolution of crude oil launch by MCX in Options trading

As we were waiting for the launch of Crude oil in options trading, after the approval by SEBI, the wait is now over! MCX has launched this trading facility today (15.05.2018).

Mr.Ponmudi, Market analyst and the MD of Enrich commodities had made the following analysis. This is a measure towards liquidity enhancement scheme. He had predicted that the number of market participants trading in Crude Options would be more and hence the volume of the trade would also increase. The volatility would be good as an outcome of the points mentioned above. It would be beneficial for upside and downside trading. The involvement of hedging strategy among the market participants would prove to be higher.

In a nutshell, Mr. Ponmudi commented the move by MCX in launching crude oil in Options Trading would serve as a next level of trading the financial instrument and its positive outcome would reflect in a great way eventually.

Ponmudi

The current scenario as predicted by Mr.Ponmudi

As predicted by Mr.Ponmudi earlier, the number of market participants trading in Crude Options has increased drastically today. Good volume of trading has taken place. The volatility was high and the liquidity was more. We can see that the momentum of crude oil would be increased as it is implemented in the days to come. The first day’s impact in trading in this scrip is a reflection about its success in the future. This would be a healthy move for the trading industry.

Minimum Investment Maximum Profit

Yes you read it right!

For trading in Crude futures, full span margin is required, whereas for trading in Crude options, the premium amount is sufficient.

Lowest investment shall yield highest returns.

Limited risk = Unlimited profit

Hedging technique can be used to minimise risk in options trading.

Brokerage will be lower in trading crude options when compared to trading in crude futures.

CTT charges will be lower in options trading

Writing off can be carried out in options trading and as there are many strategies involved, a decent profit can be obtained.

Retail participation would be more.

In the Index, Nifty generates the highest trading volume in futures, similarly in Commodities; Crude oil generates the highest trading volume in futures.

Point to be noted here is that, trading in Nifty options exists, whereas trading in Crude options did not prevail earlier.

As we know that everything has its own merits and demerits. Here in Crude Oil Options trading, the expiry date would be 2 days prior to futures contract expiry and would be on a compulsory delivery contract.

However on a closing note, thanks to SEBI for approving trading Crude oil in Options. Retailers, traders, Investors would appreciate this initiative.

Catchy offer for traders:

As an introductory offer – MCX has made exchange transaction tax free

Enrich commodities special offer – Zero brokerage trading on Crude Options

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