MCX gets Sebi's approval to launch option's contract in gold

MUMBAI: Commodity derivatives bourse MCX has got Sebi's approval to launch an option's contract in gold, an exchange official told ET. He said MCX would announce the date of launch to markets after a fortnight, during which mock trading sessions are under way.

The option will have the existing gold kilo futures contract as its underlier. The gold futures contract is of bi-monthly duration. The current contract expires on October 5, to be followed by the December contract. Sources said that options will be available for the December contract.

The timing of conversion of the option into futures contract will also be decided once MCX announces the launch date for options.

The launch of options is one of the major reforms SEBI has taken for the commodity derivatives market, more than a year after it took over regulation of the same.

Options, unlike futures, limit losses. Returns tend to be relatively higher than those yielded by futures .

MCX is the country's largest metals and energy commodity bourse. NCDEX is the largest agri futures bourse.