New to commodity options

[Aditya_Gupta]

I want to start trading in commodity options and for that I need some help/basic information. I tried searching net as well as this forum but could not find much about it so asking.

Regarding expiry date of options, we can check option chain for that. Firstly, the main point is from which underlying the options derive their prices because spot price does not show in zerodha, so is it the nearest month futures their prices are derived?
Secondly, how the closing price is determined for futures? is it just like equity futures where last 30 mins weighted average is considered?
Thirdly, how the expiry of ITM options take place? Are they cash settled or they change into futures contract. For example, silver 105000 CE sold will convert into future position at price of 105000 or not?
Fourthly, yesterday I observed at 10PM, all of my cash positions, orders as well as funds changed to Zero and while placing order, error was showing that you cannot place orders due to maintenance/ available funds are 0.00. That is a risky thing if during market hours my funds will show zero.
Lastly, I do not think zerodha allows to short options during the expiry day, so any broker which allows us to trade options in the expiry date even during the last few mins.

Thanks, any help will be appreciated

[Aditya_Gupta]

around 1 month have passed and no reply. does no one trade in commodities here??

[keshav_02]

@Aditya_Gupta

from which underlying the options derive their prices because spot price does not show in zerodha, so is it the nearest month futures their prices are derived?

In MCX commodity markets, futures derive their value from the international spot prices of commodities like gold, silver and etc. Options, in turn, are priced and settled based on these futures contracts, making futures the direct reference point for option pricing and settlement.

@Aditya_Gupta

how the closing price is determined for futures? is it just like equity futures where last 30 mins weighted average is considered?

Yes, the closing price of commodity futures on MCX is determined similar to equity futures using the volume-weighted average price (VWAP) of the last 30 minutes of trading.

@Aditya_Gupta

how the expiry of ITM options take place? Are they cash settled or they change into futures contract.

In commodity, the ITM options contracts are not cash settled, they are converted into underlying futures of the next month. This process is known as devolvement

@Aditya_Gupta

For example, silver 105000 CE sold will convert into future position at price of 105000 or not?

Yes , it will converted to 105000 price sell positions in silver futures next month contract.

@Aditya_Gupta

Fourthly, yesterday I observed at 10PM, all of my cash positions, orders as well as funds changed to Zero and while placing order, error was showing that you cannot place orders due to maintenance/ available funds are 0.00. That is a risky thing if during market hours my funds will show zero.

For this you can connect there support team via ticket or call

@Aditya_Gupta

Lastly, I do not think zerodha allows to short options during the expiry day, so any broker which allows us to trade options in the expiry date even during the last few mins.

I think it can be done in MIS on expiry, but you should check once with their support as well