MCX BULLDEX Questions & Answers

Insignia Consultants

New Delhi

Monday, September 14, 2020

TIME 7:53 AM IST                       

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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.

Remember

Bulldex = Gold+Silver.

 So

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.

Assumption :

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).

Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees  have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice. All analyses used herein are subjective opinions of the author and should not be considered as specific investment advice. Investors/Traders must consider all relevant risk factors including their own personal financial situation before trading.Website www.insigniaconsultants.in. Prepared by Chintan Karnani

Disclosure: Members, employees, directors, clients and all other people associated with “Insignia consultants” do trade in MCX metals and energies. They may or may not have positions on the trading strategies mentioned in this report. They may also have open positions in MCX metals and energies futures in trading strategies other than those mentioned in this report.