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Gold


Traditionally, Gold has been used as money and also served as a relative standard for currency equivalents specific to economic regions or countries, until recent times. India continued to remain world's second biggest consumer of Gold with 67% surge in imports in 2017 from the previous year. Gold demand in India rose to 454.4 tonnes between January-September 2017.

From an overall evaluation it is seen that India has a traditional and stable market for gold consumption. There is increase in demand from Ornamental and Electronic Sectors. Gold is considered a valuable asset, for investments and bank reserves. A huge gap exists between demand and indigenous production which is likely to continue

The market participants engaged in import, exports, domestic trading, and manufacturing of gold and gold jewelleries are exposed to price risk. Commodity derivatives product provide an effective hedging tool much to the advantage of market participants.


Gold Mini Options

Illustration – Mechanism of Exercise

Option series having strike price closest to the Final Settlement Price (FSP) shall be termed as At-the-Money (ATM) option series.

This ATM option series and three option series having strike prices immediately above this ATM strike and three option series having strike prices immediately below this ATM strike shall be referred as ‘Close to the money’ (CTM) option series.

In case the FSP is exactly midway between two strike prices, then immediate three option series having strike prices just above FSP and immediate three option series having strike prices just below FSP shall be referred as ‘Close to the money’ (CTM) option series.

All option contracts belonging to ‘CTM’ option series shall be exercised only on ‘explicit instruction’ for exercise by the long position holders of such contracts.

All In-the-money (ITM) option contracts, except those belonging to ‘CTM’ option series, shall be exercised automatically, unless ‘contrary instruction’ has been given by long position holders of such contracts for not doing so.

All Out of the money (OTM) option contracts, except those belonging to ‘CTM’ option series, shall expire worthless.

CALL Gold Mini Option Strike PUT
Mechanism of Exercise Category of Strike Category of Strike Mechanism of Exercise
All In-the-Money (ITM) option contracts, except those belonging to ‘CTM’ option series, shall be exercised automatically, unless ‘do not exercise' instruction has been given by long position holders of such contracts for not exercising ITM that are not CTM 45,000 OTM that are not CTM  Shall expire worthless
45,250
45,500
45,750
46,000
46,250
46,500
Shall be exercised only on ‘explicit instruction’ for exercise by the long position holders CTM 46,750 CTM Shall be exercised only on ‘explicit instruction’ for exercise by the long position holders
47,000
47,250
47,500
47,750
48,000
48,250
 Shall expire worthless OTM that are not CTM 48,500 ITM that are not CTM All In-the-Money (ITM) option contracts, except those belonging to ‘CTM’ option series, shall be exercised automatically, unless ‘do not exercise' instruction has been given by long position holders of such contracts for not exercising
48,750
49,000
49,250
49,500
49,750
50,000
Updated on: 25/06/2020 12:00
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