Are Spreads cash settled in MCX?

How is settlement done if at all both contracts of a spread (bull/bear) end up ITM or CTM in any of the commodities in MCX which have options enabled ?

Right now… options are available on Gold, Crude Oil, Silver, Copper and Zinc.

Is it cash settled… (When both end up ITM/CTM at expiry…(hoping so))… ?

What is the affect of negative settlement price on Options traded on these ?

Please clarify. @siva

Options on mcx won’t expire the same day as futures expire. If they are ITM they will devolve into futures, they are not cash settled, read varsity options module on mcx here to know more.

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My idea is to simply close the legs of a spread when the strikes are close to money… this is because if the strikes are close to money… that too as expiry approaches… logically both strikes must be having enough liquidity…

Only when both legs are deep ITM at expiry (for a debit spread when the underlying moves favourably), by this logic… one leg will lead to long future and other one will lead to short future…

Therefore… by this logic… whenever both are ITM, it means there should be no devolvement into futures because one cancels the other… and hence… cash settled (in this scenario).

Am I correct ?

Hai i have one doubt, i am holding 500 grms of gold , i am tryiny to do a covered call OR credit spread , but i seen there is no monthly expiray in gold , every two month only they have a expire , i am not familer in MCX option @siva can you please explain

Yes, there are no monthly contracts for mcx, each contract in MCX will have it’s own maturity type/expiry months. Read varsity here for commodities.

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Right, but ready varsity module on options on mcx once.

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there is scarcity of the volume liquidity in the options of the commodity !!!

Ok. Thank you :blush:

@siva that means suppose I hold long put option of crude which is in the money so in last day it will merge with futures , so does that imply that I would be holding naked short position on last day. And in case of long itm call will it result in naked long position or anything else.