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India's First Agri-Commodity Option Launched

By Olga

Finance minister Arun Jaitley launched agri-options trading on Sunday, amid a dip in agriculture growth and distress in the sector. The National Commodity and Derivatives Exchange Ltd (NCDEX) introduced India's first agri-commodity option in guar-seed designed as a hedge for farmers to safeguard against price risks.

India's First Agri-Commodity Option Launched

Applauding farmers potential of helping the country out of shortage crisis in the past, Arun Jaitley said that this NCDEX initiative will help farmers in producing more income from production. Claimed to be one of the biggest developments in the agricultural market, this option will help farmers to trade using this financial instrument.

Options are contracts that give buyers a right but not the obligation to buy or sell the instrument at a specified rate on or before a specified date. The agri-commodity option will help the farmer to sell their produce at a higher price when the price increases.

With markets regulator Securities and Exchange Board of India's (SEBI) approval, NCDEX is the second exchange after MCX to launch option trading in commodities. There are already 59 Farmer Producer Organisations (FPOs) trading on the NCDEX.

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