Mumbai: Retail traders are opting for commodity options over equity index options, drawn by sharper swings in energy and bullion prices and lower tax incidence.
Average daily premium turnover (ADPT) of metals and energy options on the Multi Commodity Exchange of India (MCX) rose 15% in the September quarter from the June quarter. Over the same period, ADPT in index options on the NSE and BSE fell 27% , according to exchange data.
MCX's options ADPT climbed to ₹10,450 crore, lifted by sharp moves in crude oil and natural gas prices. Tax is also tilting the field: the securities transaction tax (STT) on equity options was raised 50% to 0.15% this fiscal year, while commodity transactions are still taxed at 0.05%. Monthly options on bullion and energy products have added to the pull.
Trading equity F&O has become costlier since April, said Nilesh Sharma, Executive Director and President, SAMCO Securities. The STT hike raised the cost of every trade, he said, and together with SEBI's earlier curbs, tighter leverage rules from July and the August introduction of the Closing Auction Session (CAS), it has left the equity side crowded and expensive for traders.
The active crude oil contract on MCX gyrated in a 59% range—between a closing low of ₹6,426 a barrel on 2 July and ₹10,238 on 15 September. This compared with a 41% movement between the high and low in the previous quarter, according to Bloomberg data.