I am very surprised with Gold Petal price today and have few very important questions.
Gold Petal Price is trading at about Rs. 2740 where as the Gold Petal Stop price in Mumbai is Rs. 2922 (as per MCX website)
Infact Big Gold is also trading at around Rs. 2840 (Rs. 100 more? WHY?)
So, assuming there is no change in price from today till 31st Jan 2017. I am assuming That I will get a profit of about Rs. 180. Is my assumption correct?
I know that Zerodha doesn’t support delivery. And I don’t need it. So, I understand that Zerodha will do auto square-off at some point? Is that correct and when will that be done?
Please reply, I have bought some Gold Petal, hope I have not gone into some uneducated trap. I also checked MCX historical prices, and Gold Petal has been about Rs 50 to Rs. 80 more than Big Gold. But today it is surprisingly Rs. 100 lower?
Firstly, even though the underlying is gold, Gold petal and Gold (big) are completely different contracts. Your assumption that you will get Rs 180 is wrong. If there is no change in gold petal price, you will make 0 profits.Your profit or loss will be based on the price you sell gold petal. You have to compulsorily exit the contract 5 days before the expiry date, that is when the contract gets into compulsory delivery period. If you don't square off yourself, we'd do it on behalf (all online brokers work the same way).
Why the prices are different between gold petal vs gold big, check the contract details for both on the mcx website, under the products section.
Gold petal is 999 purity vs Gold big which is 995 purity. Price quote for petal is ex-mumbai, vs gold big which is ex-Ahmedabad (taxes are different in these two states). There are also market forces and demand/supply which ensures the prices are different.
Interestingly the price should be more for 999 purity than 995. But it was Rs. 180 per gram less. Luckily, it corrected to some extent today, and I got some profits.
The price for Gold Guinea is currently wrong and almost Rs. 1800 higher than the spot price, I have shorted some assuming it will also correct but hasn’t happened yet.
Is the short position also squared off 5 days before expiry.
Based on Gold Petal contract document on MCX website. There is a Tender Period 5 days before expiry. But still, trading can be done till expiry date, though margins are higher.