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m
PRESENTED TO:-
RAHUL SIR
à A physical substance, such as food, grains, and
metals, which is interchangeable with another product
of the same type, and which investors buy or sell,
usually through futures contracts.
à COMMODMV OPVMONS
CONVRACV
à A futures contract is an
agreement for buying or
selling a commodity for a
predetermined delivery
price at a specific future
time.
à Vhey are Standardized
Contracts
à Vraded in Future
Exchanges (Default is
taken care)
Suppose a farmer is expecting his crop of wheat
to be ready in two months time, but is worried
that the price of wheat may decline in this period.
Mn order to minimize his risk, he can enter into a
futures contract to sell his crop in two months¶
time at a price determined now. Vhis way he is
able to hedge his risk arising from a possible
adverse change in the price of his commodity.
à Êike futures, options are also
financial instruments used for
hedging and speculation.
à Vhe commodity option holder has
the right, but not the obligation, to
buy (or sell) a specific quantity of
a commodity at a specified price
on or before a specified date.
à Vhe option holder will exercise the
option only if it is beneficial to
him; otherwise he will let the
option lapse.
à For example, suppose a farmer buys a put option to sell 100 Quintals of wheat
at a price of $25 per quintal and pays a µpremium¶ of $0.5 per quintal (or a
total of $50). Mf the price of wheat declines to say $20 before expiry, the
farmer will exercise his option and sell his wheat at the agreed price of $25 per
quintal. However, if the market price of wheat increases to say $30 per quintal,
it would be advantageous for the farmer to sell it directly in the open market at
the spot price, rather than exercise his option to sell at $25 per quintal.
à °
(°) is an
independent commodity exchange based in Mndia.
Established in 2003 and Based in Mumbai
Vurnover in 2009 was USD 1.24 trillion
Sixth largest commodity exchange
Mt was established in 2003 and is based in Mumbai.
à °
bullion, ferrous and non-ferrous metals, energy, and a
number of agricultural commodities (menthol oil,
cardamom, potatoes, palm oil and others).
à Financial Vechnologies (M) à Corporation Bank,
Êtd., à Union Bank of Mndia,
à State Bank of Mndia and its à Canara Bank,
associates, à Bank of Mndia,
à National Bank for à Bank of Baroda ,
Agriculture and Rural à HDFC Bank,
Development (NABARD), à SBM Êife Mnsurance Co.
à National Stock Exchange Êtd.,
of Mndia Êtd. (NSE), à MCMCM ventures,
à Fid Fund (Mauritius) Êtd. à MÊ & FS, Merrill Êynch,
and
à New ork Stock Exchange
à National Commodity & Derivatives Exchange
Êimited (NCDEX) is a professionally managed
online multi commodity exchange.
à NCDEX is a public limited company incorporated on
April 23, 2003 under the Companies Act,1956.
à NCDEX is regulated by Forward Market
Commission in respect of futures trading in
commodities.
AGRICULTURAL NON-AGRICULTURAL
PRODUCTS:- PRODUCTS:-