SEBI the capital and the commodity market regulator has granted the permission to MCX for launching options trading in Crude oil ( 100 Barrels ), Silver ( 30 Kg), Copper( 1MT ) and Zinc (5MT). MCX would initiate action for launch of the same in due course of time along with contract specifications.
Benefits of launching options trading in Crude, Silver, Copper and Zinc:
This will enable liquidity in the market.
Volume and Volatility can be expected in the market.
In the Index, Nifty generates the highest trading volume in futures, similarly in Commodities; Crude oil generates the highest trading volume in futures.
Trading in Nifty options exists, whereas trading in Crude options does not exist.
This will serve as a platform for aggressive traders in options to trade in Crude, Zinc, Copper and Silver.
New clients can be expected including those trading in Equity segment.
With the recent announcement by SEBI, a single entity can be used for trading in multiple segments like commodity and equity which will prove beneficial to many.
Outcome of the launch of options trading in Crude, Zinc, Copper, Silver options
For trading in Crude, Zinc, Copper, Silver, futures, full span margin is required, whereas for trading in Crude, Zinc, Copper, Silver 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, Zinc, Copper, Silver futures 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.