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Turnover of crude oil option on MCX touched a new high of ₹3,560 crore on Thursday on lower cost of trading compared to options.
The trading volumes have been slowly shifting from futures to options as investors has to pay charges only on premium and not on the trading turnover as done in futures.
Typically, premium in options is just about 1-2 per cent of turnover.
Moreover, MCX has waived off transaction charges on options trading.
The average daily turnover of crude options has increased to ₹1,900 crore in June quarter compared to ₹1,144 crore in the March quarter.
On the contrary, crude futures fell to ₹28,031 crore in June quarter against ₹31,823 crore in March.
Tapan Patel, Senior Analyst (Commodities), HDFC Securities said crude oil prices are trading strong on higher demand outlook since the second half of the year. The prices got boost after the OPEC plus nations delayed decision to increase output on members disagreement.
MCX Crude oil prices have been rallying in line with global crude oil prices with additional support from rupee depreciation.
Traders have been going slow on crude futures as the initial margin required for trading in MCX Crude oil futures is much higher compared to pre-pandemic levels, he added.
On the contrary, crude oil options have witnessed record turnover with flat trading charges at MCX. The recent rally in oil prices and higher liquidity compare to other commodities has boosted options trading in crude oil at MCX, he said.
Narinder Wadhwa, President, Commodity Partcipants Association of India said trade in crude oil futures was low in last one year because of high margins and negative pricing in crude last year. With crude oil pricing turning volatile in last few months, traders are now hedging their risk on the exchange platform, he added
Option instrument are cost effective and widely used in derivatives in India, he said.
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