I read that MCX will start trading in Crude options from May 15th, can someone share the contract specifications.
MCX will begin trading in Crude Oil Option contracts of 15 June 2018 and 17 July 2018.
Here are the contract specifications.
| Symbol | CRUDEOIL |
|---|---|
| Underlying | Underlying shall be Crude Oil Futures contract traded on MCX |
| Description | Option on Crude Oil Futures |
| Option Type | European Call & Put Options |
| Trading Session | Monday to Friday: 10.00 a.m. to 11.30 / 11.55 p.m.* * based on US daylight saving time period |
| Trading Unit | One MCX Crude Oil futures contract |
| Underlying Quotation/ Base Value | Rs. Per barrel |
| Price Quote | Ex – Mumbai (excluding all taxes, levies and other expenses) |
| Strikes | 7 In-the-money, 7 Out-of-the-money and 1 Near-the-money. (15 CE and 15 PE). The Exchange, at its discretion, may introduce additional strikes, if required. |
| Strike Price | Intervals Rs. 50 |
| Base price | Base price shall be theoretical price on Black 76 option pricing model on the first day of the contract. On all other days, it shall be previous day’s Daily Settlement Price of the contract. |
| Tick Size (Minimum Price Movement) | Rs. 0.10 |
| Margins | The Initial Margin shall be computed using SPAN (Standard Portfolio Analysis of Risk) |
| Maximum Allowable Open Position | For individual clients: 9,60,000 barrels or 5% of the market wide open position, whichever is higher for all Crude Oil Options contracts. For a member collectively for all clients: 96,00,000 barrels or 20% of the market wide open position, whichever is higher for all Crude Oil Options contracts combined together. |
| Mode of settlement | On expiry of options contract, the open position shall devolve into underlying futures position as follows:- long call position shall devolve into long position in the underlying futures contract. long put position shall devolve into short position in the underlying futures contract. Short call position shall devolve into short position in the underlying futures contract. Short put position shall devolve into long position in the underlying futures contract. |
Check this circular for more on contract specifications, lifecycle and the calendar.
Check out this chapter on Varsity to learn more about commodity options.
There is no stamp duty for crudeoil futures for Tamil Nadu state. Will the options also has 0 stamp duty?