Monday, September 14, 2020
TIME 7:53 AM IST
MCX BULLDEX QUESTIONS AND ANSWERS
Use of Bulldex for Gold hedging
There are various physical market participants who have only Gold exposure to hedge and no silver exposure. So how they can hedge their "Gold Only" exposure using Bulldex? And why they should use Bulldex Future instead of direct gold Future?
Ans 1. They should create long/short position similar to their exposure and based on their physical position. Or similar to position which he otherwise takes in Gold Future. For this he needs to calculate number of Bulldex lots required for 1 kg of gold. At the same time he should take reverse position in Silver FUTURES to nullify the impact of silver prices movement. Number of silver lots can be calculated using the same calculation sheet as above.
Ans 2 : As there's is no transaction charges for Bulldex Future. Gold hedging becomes T.O charge free. Though he needs to pay for silver Future. But on cumulative basis there will be huge cost savings for Gold hedging on MCX by using Bulldex.
Bulldex = Gold+Silver.
Bulldex - silver= Gold.
Your Gold hedging will be T. O. Charge free as Bulldex tracks gold and silver prices only.
Cost Savings for Gold hedging by using Bulldex.
1 lot of Gold = Savings of 312.7.
10 lots = 3127
100 lots = 31270.
1000 lots = 312700.
Similarly you can calculate for your monthly turnover of Gold.
Gold price : 50000
Turn over charge : 265*1.18 = 312.7.
There's no transaction charges for Bulldex upto 23rd Nov 2020.
Thanks Shri Ayub Malik ji for forwarding me the same on whatapp. (copied and pasted as received).
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