The Amber Gold Fund will be tradable from today – Tejaratnews
According to Tejarat News, the trading symbols of Amber Gold Fund with maturity date of 7/30/1402 will be tradable from today (Sunday 5/1/1402) and according to the published launch notice. According to the specifications of the contract, the size of each option contract of Golden Amber Fund investment units will be equal to 1000 units and trading hours will be Saturday to Wednesday 10:00 to 17:00 and Thursdays and the last trading day 10:00 to 15:00.
In the option contract of the investment units of the Amber Gold Fund, the type of settlement after the execution of the contract is the delivery of the base asset. Also, in order to take the buying position of the buying option and the selling option, only the presence of the suggested value for buying the option in the customer’s account is sufficient. In order to take the option selling position, it is necessary to provide the initial security deposit at the time of placing the order, and it is possible to maintain the selling position with at least 70% of the necessary security deposit in the customer’s account at the end of each trading day; The initial and necessary guarantee amount is also determined by the exchange according to the formula specified in the contract specifications.
The settlement of option contracts, like other commodity derivatives in the Iran Commodity Exchange, is done by the exchange at the level of each customer, and the brokers, due to risk management and optimal control of guarantees by the exchange, despite having the legal authority to obtain more guarantees in addition to the amount of guarantee determined by the exchange, often do not request more guarantees from the customer and are satisfied with the cash guarantee available in the customer’s account.
An example regarding the operation of the gold fund option contract
Suppose a person owns 10,000 investment units of Amber Gold Fund and the price of each unit of this fund is now 2400 Tomans. According to his analysis, this person predicts a drop in the price of gold for the next three months and thinks that the drop in the price of gold will lead to a decrease in the net asset value of the fund (NAV) and as a result, the price of the fund’s units will decrease.
This person can cover the risk of falling gold price by taking 10 buy positions in the Put Option contract, with an exercise price of 2500 Tomans for the next three months. As mentioned, the size of the option contract is 1,000 gold fund units, so the investor must take 10 positions to cover the risk of his 10,000 units.
Suppose he pays about one million tomans to get 10 put positions. According to the size of the contract, he spends 100,000 Tomans to obtain each position (that is, for each 1000 units of the fund), this amount is the cost he makes to cover the risk. In simpler words, by paying one million tomans, he will have the right to sell the fund units at the price of 2500 tomans, which means he will stabilize his 24 million tomans assets at the price of 25 million tomans.
Now, if in the next three months, according to the person’s prediction, we see a decrease in the value of the fund units, for example, the price of the units reaches 2100 Tomans, this person can sell his property instead of the intrinsic value of 21 million Tomans, at the exercise price, that is, the same 25 million Tomans; It means that he will sell his property for 4 million tomans more than the intrinsic value. Of course, as mentioned, the person has spent 1 million Tomans to cover his risk, so his net profit from this transaction is 3 million Tomans.
Even if in the next three months we witness the stability of the price of fund units at 2400, a person can still sell his property at maturity for 25 million tomans. Considering the cost of one million tomans that he made to buy this option, he has not suffered any loss from this transaction yet.
If, contrary to his prediction, the value of each unit of the fund increases to more than 2,500 Tomans and reaches, for example, 2,700 Tomans, it is obvious that he does not need to sell his property at the effective price of 2,500 Tomans, because this person can sell his property at the price of 27 million Tomans in the market. In any case, his maximum loss due to the transaction of the option contract will be the payment of one million tomans for the purchase price of the option.
Source: Senate