Tuesday, 12 September 2017

SEBI to shortly approve options trading in Guar Seed Commodity Options

SEBI to shortly approve options trading in Guar Seed Commodity Options
Date : 11.09.2017




In June this year, the National Commodity and Derivatives Exchange (NCDEX) had sought the market regulator’s nod to start options contracts in guar seed.

The Securities and Exchange Board of India is expected to approve options trading in guar seed, this week, sources told Moneycontrol. That would make it the second commodity, after gold, in which options contracts can be traded. Trading in guar seed options is expected to start in the last week of October.

In June this year, the National Commodity and Derivatives Exchange (NCDEX) had sought the market regulator’s nod to start options contracts in guar seed.

“Commodity brokers can start trading immediately but traders dealing in physical buying and selling could take time to participate in guar seed options because options trading needs entirely different strategies compared to physical trade or futures,” said a Jitender Jindal, a Haryana-based trader who deals in physical trade of the commodity.

NCDEX wanted to start options trading in some other commodities as well such as castor seed and soybean. But keeping in mind the high volatility in these commodities, it sought approval only for guar seed options.

Guar seed sees trades worth Rs 400-600 crore daily. The domestic market for the physical form is about Rs 300-500 crore, but the export market for guar gum is much larger at Rs 3,000-4,000 crore.

Prices of guar seed and guar gum rose at an extraordinary pace between October 2011 and March 2012. The guar seed prices had touched a high of Rs 32,000 per quintal by March 2012. Despite several measures such as high margins, lower position limits, suspension of traders, etc. taken by the regulator, the prices kept rising.

“Guar seed is a niche market; mostly industry-related people trade in them,” said Kishore Narne, Head of Research, Motilal Oswal.

“It is purely an order-based market so traders can easily hedge their positions with lower losses. Also, the lot size is expected to be smaller, which could leave room for retail participation too,” he said.

A source close to the development told Moneycontrol: “SEBI also feels guar seed has good participation since it is among the top five commodities in volume terms.”

India accounts for 80-85 percent of the total global production of the commodity and sets the price for guar products.

SEBI may also allow more commodities for options trading after reviewing the performance of gold and guar seed.

MCX plans to launch options trading in gold in October.

Friday, 24 March 2017

Financial Research Consultant in Chennai - K.Karthik Raja

Financial Research Consultant in Chennai - K.Karthik Raja

                                     

Financial Research Consultant in Chennai - K.Karthik Raja











Wednesday, 28 September 2016

Sebi allows options trading on commodity exchanges : 28.09.2016

Sebi allows options trading on commodity exchanges : 28.09.2016


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"It has been decided that commodity derivatives exchanges shall be permitted to introduce trading in 'options'," the Securities and Exchange Board of India (Sebi) said in a circular.

With an aim to deepen the commodity derivatives markets and enhancing liquidity, markets regulator Sebi today allowed options trading on commodity bourses.

This has been a long pending demands from the exchanges, investors and market participants. So far, only future trading was permitted on commodity bourses.

 "It has been decided that commodity derivatives exchanges shall be permitted to introduce trading in 'options'," the Securities and Exchange Board of India (Sebi) said in a circular. The move become effective from today.

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Thursday, 1 September 2016

5 Surprising Advantages of Selling Commodities Options Over Stock Options -Rupeedesk Consultancy

5 Surprising Advantages of Selling Commodities Options Over Stock Options -Rupeedesk Consultancy


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“The price of a commodity will never go to zero. When you invest in commodities futures, you’re not buying a piece of paper that says you own an intangible piece of company that can go bankrupt.”

About 80% of the new clients I speak with have some type of experience with stock options. Most of them, when prodded, express a desire to “get properly diversified” as one of their chief reasons for taking the next step to commodities. What intrigues me is that few have a firm grasp of the real advantages that commodities options can offer – especially if they are accustomed to the constraints that stock option selling can place on an investor.

Don’t get me wrong – selling equity options can be a lucrative strategy in the right hands. However, if you are one of the tens of thousands of investors that sells equity options to enhance your stock portfolio performance, you may be surprised to discover the horsepower you can get by harnessing this same strategy in the commodities arena

5 Key Differences between Stock and Futures Options
Selling (also known as writing) options can offer benefits to investors in equities or commodities. However, there are substantial differences between writing stock options and writing futures options. What it generally boils down to is leverage. Futures options offer more leverage and therefore can offer greater risk, but also greater potential rewards. But this same leverage opens up several other key advantages you may have never heard of. If you’ve only ever sold equity options, this seminar

In selling equity options, one does not have to guess short term market direction to profit. The same remains true in futures, with a few key differences.

1. Lower Margins (Higher ROI):
A key factor that attracts many stock option traders to futures. Margins posted to hold short stock options can be 10 to 20 times the premium collected for the option. With the SPAN margin system used in futures, options can be sold with out of pocket margin requirements* for as little as 1 to 1 ½ times premium collected. For instance, you might sell an option for $600 and post a margin of only $700. (Total margin requirement minus premium collected). What does this mean for you? The potential for a large return on your invested capital. (Of course, corresponding risk applies to this as well.)


2. Big Premiums: Attractive premiums can be collected for Deep out of the money strikes.
Unlike equities, where to collect any worthwhile premium, options must be sold 1-3 strike prices out of the money, futures options can often be sold at strike prices far out of the money. At such distant levels, short term market moves will typically not have a big impact on your option’s value. Therefore, time value erosion may be allowed to work less impeded by short term volatility.

3. Liquidity
Many equity option traders complain of poor liquidity hampering their efforts to enter or liquidate positions. While some futures contracts have higher open interest than others, most of the major contracts like Financials, Sugar, Grains, Gold, Natural Gas, Crude Oil, have substantial volume and open interest offering several thousand open contracts per strike price.

4. Real Diversification
In the current state of financial markets, many high net worth investors are seeking precious diversification away from equities. By expanding into commodities options, you not only gain an investment that is 100% uncorrolated to equities, your option positions can also be uncorrelated to each other. In stocks, most of the time, your individual stock (option) will be largely at the mercy of the index as a whole. If Microsoft is falling, chances are, your Exxon and Coca Cola are falling too. In commodities, the price of Natural Gas has little to do with the price of Wheat or Silver. This can be a major benefit in diluting risk.

5. Fundamental Bias
crops - selling commodities options
When selling a stock option, the price of that stock is dependent on many, many factors – not the least of which is corporate earnings, comments by CEO/Board, legal actions, Fed Decisions, or direction of the overall index. Soybeans however, can’t “cook their books.” Silver can’t be declared “too big to fail.”

Knowing the fundamentals of a commodity, such as crop sizes and demand cycles, can be of great value when selling commodities options.

In commodities, it is most often old fashioned supply and demand fundamentals that ultimately dictates price. Knowing these fundamentals can give you an advantage in deciding what options to sell.

Friday, 29 July 2016

Mcx Commodity Market News : Evening Session : 29.07.2016

Mcx Commodity Market News : Evening Session : 29.07.2016

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Muted demand hurts lead futures  29/07/2016 16:52

Lead futures were trading lower during the evening trade in the domestic market on Friday as investors and speculators trimmed their bets in the industrial metal amid decline in physical demand for lead, from battery-makers, in the domestic spot market. Further, decrease in demand from battery makers in the spot market and offloading of positions due to expiry influenced lead prices at futures trade

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Crude oil futures down on supply glut concerns
29/07/2016 15:43

Crude oil futures fell during the afternoon trade in the domestic market on Friday as participants exited positions in the energy commodity amid fears that a slowing global economic recovery may exacerbate a global supply glut in crude and refined products. While Goldman Sachs said this week that it doesn’t expect a recovery in oil prices in the near-term, US inventories of crude oil rose for the first time in ten weeks and production too climbed, signaling a bearish outlook for the fuel. 

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Low demand drags down copper futures by 0.50%
29/07/2016 15:07

Copper futures were trading lower during the afternoon trade in the domestic market on Friday as speculators trimmed their positions in the industrial metal amid fall in demand at the domestic spot markets. The prices of copper declines at futures trade led by a weak trend in base metals at the spot markets due to muted demand from consuming industries

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Uncertain US demand outlook weighs on Copper
29/07/2016 14:58

Copper futures fell during noon trade in the domestic market on Friday as investors and speculators exited positions in the industrial metal amid doubts surrounding the health of the US economy as a regional factory gauge returned to contraction and unemployment claims climbed, dimming the demand prospects for the metal.The number of Americans who filed to claim jobless benefits rose by 14,000 to 266,000 in the week ended July 23 while a gauge measuring manufacturing activity in the Kansas region fell to -6 in July from 2 in June, with a reading below 0 signaling contraction. 

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Natural Gas lower despite bullish storage data
29/07/2016 14:16

Natural Gas futures fell during noon trade in the domestic market on Friday as investors and speculators exited positions in the energy commodity tracking weakness overseas where prices fell on profit taking after a stellar rally in the previous session. The fuel had rallied 8 per cent in the international market on Thursday after a smaller than expected build in US storage levels signaled a pickup in demand for the fuel in the world’s biggest gas consuming nation.

The EIA reported that US gas supplies increased by 17 billion cubic feet to 3.294 trillion cubic feet in the week ended July 22, 2016, against an expected increase of 26 billion cubic feet, while stockpiles rose by 34 billion cubic feet in the prior week, 49 billion cubic feet a year earlier with the five-year average gain at 52 billion cubic feet. 

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Cardamom bulls rule the roost
29/07/2016 13:39

Cardamom futures jumped by more than 1 per cent during noon trade in the domestic market on Friday as investors and speculators booked fresh positions in the agri-commodity amid a pickup in physical demand for cardamom in the domestic spot market.Further, restricted supplies amid lower physical arrivals from the major cardamom producing belts in the country also exerted upward pressure on domestic cardamom prices. 

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Mentha Oil higher on firm physical demand
29/07/2016 13:01

Mentha oil futures rose during noon trade in the domestic market on Friday as investors and speculators booked fresh positions in the agri-commodity amid a pickup in physical demand for mentha oil from major consuming industries in the domestic spot market.Further, restricted supplies amid lower physical arrivals from the major mentha oil producing belts in the country also exerted upward pressure on domestic mentha oil prices. 

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Yellow metal shines on global cues
29/07/2016 12:39

Gold futures were trading higher during the noon trade in the domestic market on Friday as traders widened their bets in the precious metal tracking positive cues from global markets. Traders indulged in widening their positions following a better trend in global markets after the US Fed reiterated a gradual approach to raising interest rates, sending the dollar lower thus raising demand for safe haven assets, buoyed the upside in gold futures. 

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Gold logs mild gains after BOJ stimulus
29/07/2016 12:30

Gold futures were trading higher during noon trade on Friday after the Bank of Japan decided to expand its ETF program to 6 trillion yen annually, but left its target for annual government bond purchases unchanged at 80 trillion yen and maintained its policy rate at the same level, curbing gains in the precious metal, a hedge against the inflationary risk of monetary stimulus. Despite a cautious move on the stimulus front by the apex bank, the Bank of Japan highlighted downside risks to the Japanese economy, signaling that more stimulus could be on its way, if needed. The focus has also turned to US Q2 GDP data with growth expected to come in at 2.6 per cent annualized rate. 

Wednesday, 20 July 2016

Share Market Training

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