Yes ! Commodity market is a market where the raw and primary commodity (like gold, silver, copper, soybean , chana) or products are traded over the organized Exchange that is
MCX deals in hard commodity that is Bullion , Base Metal and Energy it has nine counters while NCDEX widely known for the trading in Agri/Soft Commodities.
In MCX and NCDEX different commodities are traded on its Derivative contract or on future contract. on 29 Sep 2016 SEBI has provide official approval to exchange for start trading in Commodity Option. As we know that derivative are the financial instrument whose value is derived from underlying asset. In commodity derivative the underlying asset is spot market price of different commodities.
To trade in Commodity derivative an individual need to invest just a margin amount, for Base Metals and Energy that margin amount required is 5–10% like
zinc May future lot size is 5000 and its CMP is 166.65 so the investment required would be
166.65*5000 = 833250
The margin need to pay to exchange would be 833250* 5/100 = 41662.25 (Approx)
This post first appeared on After Italy Verdict Gold Trades Higher On Safe-haven Demands; Silver Down, please read the originial post: here