10.15 Trading on MCX II: margins, the evening session, expiry, delivery and options

10.15.1Margins and margin hikes#

The framework (SEBI circulars CIR/CDMRD/DRMP/01/2015 of 1 Oct 2015 and SEBI/HO/CDMRD/DRMP/CIR/P/2016/77 of 1 Sep 2016 [V]):

Initial margin covers a 99% value-at-risk over a margin period of risk of at least two days, using an exponentially weighted volatility estimate. It is subject to a floor (4% of contract value for most commodities).
Extreme loss margin (ELM): at least 1% of the value of gross open positions.
Additional and special margins may be imposed by the exchange in volatile markets. Concentration margins apply to large positions.
Pre-expiry and tender-period margins rise towards expiry. A delivery-period margin is the higher of 3% plus a five-day 99% VaR of spot prices, or 20%. Calendar-spread margin benefits are withdrawn from the start of the tender period, or from expiry minus six days.
Clients pay initial margin and ELM upfront; other margins by T+2. In practice brokers collect them upfront.

Margins move Examples from 2025–26¹:

An additional 2% margin on silver from 17 Oct 2025.
An additional 7% on silver and 3% on gold from 5–6 Feb 2026, after silver's January peak (MCXCCL/RISK/027/2026), withdrawn from 19 Feb 2026 (MCXCCL/RISK/035/2026).
Crude's minimum initial margin was reduced from 33% to 30% from 18 May 2026.

The 33% that preceded that cut reflects the 2026 oil shock (10.8). A margin rate is a volatility forecast by the clearing corporation, and it rises after the volatility has arrived.

Proposition 10.16when a margin call arrives

An account with equity $E$ holds a long futures position of notional $N$ under margin rate $m$ (fraction of notional). After an adverse price move of $x$ (a fraction) and a margin change to $m'$ , the account is short of margin if and only if

E - xN < m'(1 - x)N \iff x > x^\ast = \frac{E - m'N}{(1 - m')N}. \tag{10.29}

With no margin change ( $m' = m$ ), the price move that triggers a call is $x^\ast = (E/N - m)/(1 - m)$ . A hike from $m$ to $m'$ lowers the trigger by $(m' - m)N/((1 - m')N) = (m' - m)/(1 - m')$ , about the size of the hike, and can make $x^\ast$ negative: a call with no price move at all.

Proof

After the move, equity is $E - xN$ (the futures loss is paid in cash through daily settlement) and the position's value is $(1 - x)N$ , so required margin is $m'(1 - x)N$ . The account is short when equity is below the requirement; solving the linear inequality for $x$ gives (10.29), since $1 - m' > 0$ . The second statement is the difference of $x^\ast$ at $m$ and at $m'$ , using $1 - m' \approx 1 - m$ .∎

The margin hike arrives when the price has already moved against crowded positions, so the two terms of (10.29) work together. The Hunt brothers met the same mechanism in 1980, when exchange margin increases and trading restrictions forced leveraged silver longs to sell (10.11.2; M03 on ruin). Problem 10.26 computes it for a silver position.

10.15.2The evening session and the overnight gap#

MCX trades non-agricultural contracts from 9:00 to 23:30 IST while the US is on daylight time and to 23:55 IST in US winter time (from 2 Nov 2026 to 12 Mar 2027, MCX circulars 068/2026 and 550/2026 [S]). The US releases that move gold, silver and crude fall in that session, at times that shift by an hour with US daylight saving (IST is ET + 9:30 in US summer and ET + 10:30 in US winter):

Release (US Eastern time)	IST, US summer	IST, US winter (from 2 Nov 2026)
CPI, payrolls (08:30)	18:00	19:00
EIA weekly petroleum status report, Wednesdays (10:30)	20:00	21:00
FOMC statement (14:00)	23:30, as MCX closes	00:30, after MCX closes

So in US winter an FOMC decision can only be traded on MCX at the next morning's 9:00 open, by which time COMEX and NYMEX, which trade almost around the clock, have priced it. An MCX position held through the close is exposed to a gap equal to the US move between 23:55 and 9:00 IST, plus any change in USDINR before the Indian FX market opens. A stop-loss order resting overnight protects only against moves that happen while MCX is open. Size positions held overnight for the gap, as Playbook 9 (M15 · 15.9) does with its gap cap, and see Playbook 11 (M15 · 15.11) for a crude-mini trade held across EIA days, an FOMC evening and an OPEC+ weekend.

10.15.3Expiry, the tender period and delivery#

Bullion (GOLD, GOLDM, SILVER, SILVERM, SILVERMIC) is settled by compulsory delivery: open positions at expiry turn into an obligation to deliver or take delivery of bars at an MCX-accredited vault.

Expiry. GOLD, GOLDM and SILVER futures expire around the 5th of the contract month; the silver mini and micro contracts are reported to expire on the last business day of the month [S].
Tender period. Before expiry runs a staggered-delivery or tender period, during which sellers may tender delivery and holders of long positions can be assigned it. SEBI cut the minimum staggered-delivery period to three working days in circular SEBI/HO/MRD/MRD-PoD-1/P/CIR/2024/57 of 24 May 2024 [V]. Exchange notices on MCX's actual bullion tender period conflict (three days, or about five) [S].
What delivery requires. Taking delivery means paying the full contract value plus 3% GST, and holding bars in a vault or collecting them. Giving delivery means already owning accredited bars. A trader without either must be flat before the tender period begins; margins rise sharply into it (10.15.1).
Rule for this course. Close or roll bullion futures by the day before the tender period starts, as stated in that month's MCX expiry notice. Write the date in the trade plan at entry.

Crude and natural gas are cash-settled. The final settlement price of crude is the NYMEX WTI front-month settlement times the RBI reference rate (10.10; the April 2020 settlement at −₹2,884/bbl is 10.11.1). MCX crude expires about one business day before the corresponding NYMEX contract [S]. There is no delivery risk, but there is settlement-day risk: the final price is set in New York after the Indian market has closed.

Daily price limits Bullion and energy contracts have daily price bands that widen in steps (reported as 3%, then 6%, then 9% for gold; 4%, 6%, 9% for silver and crude) after a cooling-off period [S]. A band slows a move; it does not stop it, and a stop order cannot fill beyond the band.

10.15.4Options on futures#

SEBI permitted options on commodity futures in 2016 (circular SEBI/HO/CDMRD/DMP/CIR/P/104 of 28 Sep 2016 [S]) and set their design in SEBI/HO/CDMRD/DMP/CIR/P/2017/55 of 13 Jun 2017 [V]:

MCX options are European.
On exercise they devolve into a position in the underlying future at the strike price. A long in-the-money call becomes a long future the day before the futures tender period, with full futures margin due.
The exchange sets option expiry before the futures' tender period.
In-the-money options are exercised automatically unless the holder instructs otherwise (from 2022 [S]).

Because the underlying is a future, Black-76 (10.21) prices them (M08 · 8.8).

Worked example 10.15.1CTT on a gold option

Take the 10.10 example: one GOLD Dec-26 call, strike ₹1,39,000, premium ₹2,765.6 per 10 g, or ₹2,76,563 a lot (100 units).

Sold before expiry: CTT is 0.05% of the premium, ₹138.28. The comparable equity-option STT at 0.15% of premium would be ₹414.84.
Exercised: CTT is 0.0001% of the settlement price value, about ₹13.88 at ₹1,38,839. But the exercise leaves a long GOLD future, which needs margin and, to be closed, a sale that pays CTT of 0.01% (₹1,388). If the trader cannot carry the future into the tender period, devolvement is the costlier path.
The equity-option exercise trap of M09A · 9A.14 (STT of 0.15% of intrinsic value) does not exist in this form. The futures-margin trap replaces it.

10.15.5A checklist before an MCX trade#

Contract: the smallest lot that lets the stop sit where the analysis puts it (10.14.3).
Size from the stop at 1% risk; check the margin, and the margin after a plausible hike, with (10.29).
Calendar: the US releases in the holding period (10.15.2), the RBI reference-rate and Indian holidays, the expiry and the first tender day (10.15.3).
Overnight: decide whether the position is held through 23:55 IST. If so, size for the gap.
Costs by (10.28), and tax as business income (10.14.2).
Live data: MCX's own pages for prices and circulars. Gold and silver ETF prices on https://oicharts.com/etfs/gold and https://oicharts.com/etfs/silver are the NSE-traded alternative (they settle T+1 into demat, carry no margin and are taxed as capital gains). There is no MCX page there.