InvestorQ : Do I need to take delivery or can I just trade mentha oil futures?
seema Upadhyaya made post

Do I need to take delivery or can I just trade mentha oil futures?

krithika Saxena answered.
3 years ago

There is no compulsion to take delivery. The choice is yours; you can either take actual delivery or you can just take a trade, in case you are not a person with a genuine exposure to the product risk. Mentha oil contracts are initiated on the 01st of each month and expire on the last day of the calendar month. At any point of time, there will be a total of 12 monthly futures contracts available to trade on the MCX. On the first day of each month, a fresh 3-month forward contract is freshly introduced in the exchange. So on September 01st 2017, a new December 2017 will be introduced in the exchange.

The lot size and the settlement of mentha oil are measured in drums, where 1 drum is equivalent to 180 KG. The minimum lot size is 2 drums which is equivalent to 360 KG. Currently, mentha oil quotes at a price of around Rs.1170/KG. Thus at the current price the minimum notional value of a lot will be Rs.421,200/- (1170*360). Considering that mentha oil contracts attract an initial margin of 5% (4% SPAN margin + 1% extreme loss margin), the actual margin payable for 1 lot of mentha oil will be around Rs.21,075/-.