A NIFTY option settles in cash: at expiry the exchange pays the difference between the strike and the index’s settlement price, and the contract is gone. MCX commodity options work differently. They are options on futures: each one is written on a specific futures contract, and an option that finishes in the money does not pay out in cash but turns into a position in that future. If you come to crude oil, gold or natural gas options from index options, this one difference explains most of what looks unfamiliar on the chain, at expiry and in your margin.
What options on futures means
An option on a futures contract gives its buyer the right to a position in that future at the strike price: a call to a long futures position, a put to a short one. Settlement happens in two legs. The premium changes hands when the option is traded, as with any option. Then, at expiry, an in-the-money option is exercised and devolves into the futures contract it is written on, and the writer on the other side is assigned the opposite position (SEBI’s FAQs on commodity derivatives set out both legs). Out-of-the-money options expire worthless, as they do on NSE.
Every contract OIData reads on MCX is built this way: crude oil, natural gas, gold, silver, copper and their minis are all options on futures.
Which future an option is written on
Each monthly options series is written on one futures month, and the exchange’s contract list says which. Usually it is the same month: the 17 November 2026 crude oil options are written on the November future, which expires two days later, on 19 November. Not always: gold’s 30 October and 27 November 2026 options were both written on the December future.
The options series expires before its future, which leaves room for what happens next: an option that finishes in the money becomes a position in a future that is still trading.
How options on futures change the option chain
On an index chain the line between the strikes is spot. On a chain of options on futures it is the future the series is written on, which OIData marks Fut. Everything is read against it: which strike is at the money, where max pain sits relative to the price, how far away the walls are.
The chain above is GOLD’s 30 October series on 27 October 2026. The Fut line sits between the 1,44,000 and 1,44,500 strikes: that is the December future near 1,44,100, not the price of physical gold or the international spot price converted to rupees. Three practical consequences follow:
- Different series, different centres. Each series is read against its own future. Natural gas showed this the same day: the October future, expiring, traded near 253 while the November future the next series is written on traded near 288. When the front series changes, the chain’s centre can jump with no move in the market.
- Open interest in lots. MCX reports open interest in lots, so a figure on the chain is lots of the contract, not units (lot size and open interest in lots).
- Implied volatility against the future. IV and the greeks are worked out from the future’s price and the time to the option’s own expiry, so two expiries written on the same future can be compared across time alone.
Expiry and margin
Because an in-the-money option turns into a futures position, the last days of a series behave differently from an index expiry. A futures position needs futures margin, which is far larger than the premium a buyer paid, so margins rise as expiry approaches and many brokers close or restrict open in-the-money positions on the evening before expiry. Check your own broker’s notice for each commodity’s expiry rather than assuming the index-option routine applies.
For writers, assignment means being handed the opposite futures position at expiry. Buyers who do not want to hold a future usually close the option before the final session. Either way, the open interest of a series tends to fall through its last days as positions are closed or rolled to the next month (futures rollover explained).
Reading options on futures with OIData
OIData treats each commodity series as what it is, through your own broker connection:
- The option chain shows the future each series is written on as the Fut line, with open interest in lots and IV against that future.
- Dealer Positioning measures every expiry on its own future and counts the rupees with the units in a lot, so a crude oil lot counts as 100 barrels.
- The Volatility page builds the IV term structure from each expiry’s own future, so a gap between two expiries is volatility, not a difference in underlying.
- The MCX option chain page lists every contract with its lot and the unit its price is quoted in.
Options on futures FAQ
Are MCX commodity options settled in cash? No. They are options on futures: an in-the-money option at expiry devolves into the futures contract it is written on.
What does a call become at expiry? A long position in the future, if it finishes in the money; a put becomes a short position. The writers take the opposite side.
Why does the option chain show a future instead of spot? Because the option’s underlying is that future. Its price, not the spot commodity’s, decides whether the option is in the money.
Can two expiries have the same underlying future? Yes. Gold’s October and November 2026 options were both written on the December future.
Why do brokers close in-the-money commodity options before expiry? A devolved position needs full futures margin, much larger than an option’s premium, so brokers close or restrict such positions to avoid shortfalls.
Takeaways
- MCX commodity options are options on futures; NIFTY options settle in cash against the index.
- Each series is written on one futures month, shown on OIData’s chain as Fut.
- In-the-money options devolve into futures at expiry; out-of-the-money options expire worthless.
- Devolvement needs futures margin, so the last days of options on futures differ from an index expiry.
- Read each series against its own future; different series can sit on different prices.