India’s Oldest Stock Exchange, The Bombay Stock Exchange has launched options on goods contract on its platform from today. The two contracts launched are gold mini (100 gram) and silver kilo. These contracts were launched by S K Mohanty, whole-time member of markets regulator SEBI, who emphasised that this is the right time for the launch of these contracts. These contracts are deliverable contracts and shall terminate into physical deliveries at the time of expiry. The National Stock Exchange (NSE), which has also received SEBI approval for launching options in goods contract, will introduce options on gold mini from June 8.
What this means
Options contract gives the buyer or holder of the contract the right but not the obligation to buy or sell the underlying asset at a predetermined price within or at the end of a specified period. The options on goods contracts, Gold Mini and Silver Kilo, will enable small-time jewellers and retailers to come forward and hedge their price risk on the BSE’s commodity platform. This is an endeavour by BSE to offer new products to commodity market participants and to deepen the market ecosystem. With this launch, BSE becomes India’s first exchange to launch options on goods contract like Gold and Silver. The BSE and NSE have entered into the commodity segment only in 2019 and are making persistent attempts to gain volumes.