Contract Specification for Copper Options with

Copper (2500 Kilograms) Futures as underlying

Symbol COPPER
Underlying Underlying shall be Copper Futures contract traded on MCX
Description Option on Copper Futures
Option Type European Call & Put Options
Contract Listing Contracts will be available as per the Contract Launch
Calendar
Contract Start Day 1st day of contract launch month. If 1st day is a holiday then the
following business day.
Expiry Day (Last Three business days prior to the first business day of Tender
Trading Day) Period of the underlying futures contract.
Trading
Trading Period Mondays through Fridays
Trading Session Monday to Friday: 9.00 a.m. to 11.30 / 11.55 p.m.*
* based on US daylight saving time period
Trading Unit One MCX Copper futures contract
Underlying Rs. Per Kg
Quotation/ Base
Value
Underlying Price Ex-Warehouse Thane district (excludes only GST)
Quote

Strikes 7 In-the-money, 7 Out-of-the-money and 1 Near-the-money.

(15 CE and 15 PE). The Exchange, at its discretion, may
introduce additional strikes, if required.
Strike Price Rs. 5.00
Intervals
Base price Base price shall be theoretical price on Black 76 option pricing
model on the first day of the contract. On all other days, it shall
be previous day’s Daily Settlement Price of the contract.
Tick Size (Minimum Rs. 0.01
Price Movement)
Daily Price Limit The upper and lower price band shall be determined based on
statistical method using Black76 option pricing model and
relaxed considering the movement in the underlying futures
contract. In the event of freezing of price ranges even without a
corresponding price relaxation in underlying futures, if deemed
necessary, considering the volatility and other factors in the
option contract, the Daily Price Limit shall be relaxed by the
Exchange.
Margins The Initial Margin shall be computed using SPAN (Standard
Portfolio Analysis of Risk) software, which is a portfolio based
margining system. To begin with, the various risk parameters
shall be as under:
A. Price Scan Range – 3.5 Standard Deviation (3.5 sigma)
B. Volatility Scan Range – Minimum 5% or as decided by
MCXCCL from time to time. For applicable VSR refer
latest circulars issued by MCXCCL.
 C. The Short Option Minimum Margin (SOMM) and Margin
Period of Risk (MPOR) shall be in accordance with SEBI
Circular no. SEBI/HO/CDMRD/DRMP/CIR/P/2020/15
dated January 27, 2020. For applicable SOMM and
MPOR refer latest circulars issued by MCXCCL from
time to time.
D. Extreme Loss Margin – Minimum 1% (to be levied only
on short option positions).
E. Premium of buyer shall be blocked upfront on real time
basis.
Premium Premium of buyer shall be blocked upfront on real time basis.
Margining at client Initial Margins shall be computed at the level of portfolio of
Level individual clients comprising of the positions in futures and
options contracts on each commodity
Real time The margins shall be recomputed using SPAN at Begin of Day,
computation 9.30 am, 11.00 am, 1.00 pm, 3.00 pm, 5.00 pm, 7.00 pm, 8.30
pm, 10.30 pm and End of Day.
Mark to Market The option positions shall be marked to market by deducting /
adding the current market value of options positions (positive
for long options and negative for short options) times the
number of long / short options in the portfolio from / to the
margin requirement. Mark to Market gains and losses would
not be settled in Cash for Options Positions.
Risks pertaining to a) In the initial phase, a sensitivity report shall be provided
option that devolve to members of the impending increase in margins at
into futures on least 2 days in advance. The mechanism shall be
expiry reviewed and if deemed necessary, pre-expiry option
margins shall be levied on the buy / sell / both positions
during last few days before the expiry of option contract.
b) The penalty for short collection / non collection due to
increase in initial margins resulting from devolvement of
options into futures shall not be levied for the first day.
Additional and/ or At the discretion of the Exchange when deemed necessary
Special Margin
Position Limits
Maximum Position limits for options would be separate from the position
Allowable Open limits applicable on futures contracts.
Position
For client level: 14,000 MT or 5% of the market wide open
position, whichever is higher - For all Copper Options contracts
combined together.

For a member level: 1,40,000 MT or 20% of the market wide

open position, whichever is higher - For all Copper Options
contracts combined together.

Upon expiry of the options contract, after devolvement of

options position into corresponding futures positions, open
positions may exceed their permissible position limits
applicable for future contracts. Such excess positions shall
have to be reduced to the permissible position limits of futures
contracts within two trading days.
Settlement
Settlement of T+1 day
premium/Final
Settlement
Mode of settlement On expiry of options contract, the open position shall devolve
into underlying futures position as follows:-
 long call position shall devolve into long position in the
underlying futures contract
 long put position shall devolve into short position in the
underlying futures contract
 short call position shall devolve into short position in the
underlying futures contract
 short put position shall devolve into long position in the
underlying futures contract
All such devolved futures positions shall be opened at the strike
price of the exercised options
Exercise All In the money (ITM)# option contracts shall be exercised
Mechanism at automatically, unless ‘contrary instruction’ has been given by
expiry long position holders of such contracts for not doing so.

The ITM option contract holders who have not submitted

contrary instructions shall receive the difference between the
Settlement Price and Strike Price in Cash as per the settlement
schedule.

In the event contrary instruction are given by ITM option

position holders, the positions shall expire worthless.

All Out of the money (OTM) option contracts shall expire

worthless.

All devolved futures positions shall be considered to be opened

at the strike price of the exercised options.

All exercised contracts within an option series shall be

assigned to short positions in that series in a fair and non-
preferential manner.

#ITM for call option = Strike Price < Settlement Price

ITM for put option = Strike Price > Settlement Price
Due Date Rate Daily settlement price of underlying futures contract on the
(Final Settlement expiry day of options contract.
Price)
 Contract Launch Calendar for Copper Options contracts
expiring during the year 2025

Option Contract Launch Option Contract Expiry

Month Month

October 2024 January 2025

November 2024 February 2025
December 2024 March 2025
January 2025 April 2025
February 2025 May 2025
March 2025 June 2025
April 2025 July 2025
May 2025 August 2025
June 2025 September 2025
July 2025 October 2025
August 2025 November 2025
September 2025 December 2025

(Reference Circular No.: MCX/TRD/651/2024 dated September 30, 2024,

&
MCX/TRD/646/2024 dated September 27, 2024)