Jul 21, 2017, 07.49 PM IST
In commodities, where prices are so volatile, options trading is like a deposit on the futures contract. The buyer or the seller saves himself/herself from losing too much just in case the futures contract becomes unprofitable for him/her.
Sebi recently allowed options trading in commodities trading in India, but unlike equity options, those in the commodity market will be settled at the futures price on expiry with the option holder converting their positions into futures contracts.
Why commodity traders are fleeing the business
Agri-commodities: Prices of cereals ease
The hottest commodity in China may start to cool soon
Follow commodities, but mint money in equities; here’s how
Options trading in commodity futures