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MCX bullion contracts designed for hedging requirements of Importers, Branded jewellers, small & medium jewellers, exporters etc.

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In his detailed presentations, Shivanshu Mehta, Head, Bullion, MCX, spoke about the new product Options. “Options offer the buyer an Insurance against adverse movement, but allow for participation on favourable side. It offers Maximum Loss to the extent of Premium paid for Buyer, exchange Traded options free from counter party risk, futures & Options combination (both risk management tools) gives leverage of futures with the safety of options: Profit from change in future prices but limit losses via Options. Participants can devise hundreds of effective hedging strategies. Better Cash-flow management-one-time payment of Premium and low Transaction Cost, low capital intensive.

Explaining the various advantages of hedging through MCX, Mehta said that MCX ensures the protection of profit margin and assures insurance in case of adverse movement but allows for participation on the favourable side. He also showed how fixed gold can be protected through MCX and one can incur loss only to the tune of the premium paid.

Stressing that volatility is the key to handling hedging, the presentation also discussed dealer hedging and inventory hedging techniques with MCX besides showing the different bullion contracts designed for importers, branded jewellers, small and medium jewellers and exporters for gold and silver.

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