What happens if I hold MCX futures till expiry?

chethan

I am holding gold futures position which is expiring in 3 days. What happens if I dont square off before expiry? Will I have to take physical delivery or it will be cash settled? I am confused about expiry process on MCX.

chethan

Reply by: MCX_Rules_Expert
In MCX, most commodity futures are PHYSICALLY settled not cash settled. If you hold till expiry you will have to give/take physical delivery depending on whether you are short or long. For retail traders this is nightmare because you need to arrange for warehousing, quality checks, pay full amount etc. ALWAYS square off your positions at least 2-3 days before expiry. Dont take risk.

chethan

Reply by: ScaredTrader_Mumbai
I made this mistake once with silver contract. Held till expiry thinking it will be cash settled like equity futures. Broker called me asking to arrange ₹18 lakhs for taking delivery! Somehow managed to square off on expiry day itself but lost lot of money in panic. Learn from my mistake and always exit before expiry.

chethan

Reply by: Experienced_Hedger
Only exception is if you are actual user of commodity and want physical delivery then holding till expiry makes sense. For example if you are jeweller and need gold, you can take delivery through MCX. But for speculators, never hold till expiry. Roll over your position to next month contract if you want to continue trade.