MENTHAOIL

Lot size: One standard contract represents 360 kilograms. This equals 2 drums of mentha oil.

Tick size: Minimum price movement is 10 paise per kg. Each tick changes the contract value by ₹36.

Quotation: Prices are quoted ex-Barabanki, inclusive of mandi tax but exclusive of GST and other levies.

Expiry: Contracts expire on the last calendar day of the month. If that day is a holiday, the preceding working day applies.

Trading hours: Monday through Friday, 9:00 AM to 5:00 PM.

Daily Price Limit: The initial circuit breaker sits at 4%. After a 15-minute pause, the limit expands by 2% to a total of 6% for the rest of the session.

Initial margin: Minimum 12% or SPAN-based, whichever is higher. Extreme loss margin applies on top.

Open Interest: Total outstanding contracts across all participants. Rising OI with rising price indicates fresh long positions. Rising OI with falling price indicates fresh shorting.

Position limits: Individual clients can hold up to 167.5 MT. Members can hold 1,675 MT or 15% of market-wide OI, whichever is higher. Near-month limits are 41.875 MT for individual clients.

Maximum order size: 18,000 kg per order. This equals 100 drums.

Delivery unit: 360 kg or 2 drums, with a tolerance limit of 1% per drum. Quality specifications cover optical rotation, menthol content, and purity standards.

First degree exposure to the cycles of agri-commodities: The mentha price is driven by weather, sowing decisions and export demand. Futures provide an opportunity to trade along those cycles without being a source or owning drums.

Lower capital through margin: You commit only a fraction of the contract value as margin. This releases up cash, but also can compound losses without proper management.

Hedging for farmers and exporters: There is a price risk for mentha cultivators and mentha oil exporters. MCX futures prices are determined in anticipation of sale, harvest or shipment. This mandatory delivery design puts the "operative" hedging in place.

Transparent, regulated infrastructure: MCX is SEBI regulated. Prices are public. Settlement is done in a regulated way. The clearing corporation helps to limit counterparty risk.

Quality-assured delivery: Compulsory delivery at expiry ensures convergence between futures and spot. Sellers deliver oil meeting the MCX quality specifications. Buyers receive certified mentha oil in standardised drums.

Directional trade: Buy if you expect mentha prices to rise. Sell if you expect them to fall. This is the simplest approach. Position size relative to margin is critical.

Calendar spread: Buy one expiry month. Sell another. Profit depends on the spread between months, not the absolute price. Lower margin. Lower volatility than outright positions.

Hedging: A farmer who has standing crops of mentha, or an exporter who has forward contracts for mentha, may put on futures to hedge prices. If spot falls, the futures profit offsets the physical loss.

Basis trade: Speculate on the gap between the Barabanki spot and the MCX futures. If the basis is broad, it could turn back around again. It involves an understanding of mandi dynamics and export flows.

Seasonal cycle trading: The prices of mentha oil have a seasonal trend. Prices often rise before harvest due to supply fears and fall after harvest when fresh stocks arrive. These cycles are mapped to time entries by traders.

Track Barabanki mandi rates: The domestic price of 'MENTHAOIL' is tied to the Barabanki spot market. The earliest indicator of the changes in supply comes from "daily mandi" reports.

Understand delivery obligations: MENTHAOIL has compulsory delivery. Suppose you do not want physical settlement, square off before the staggered delivery period begins. The last three trading days are for delivery intentions. Delivery is at Barabanki in 180-kg drums.

Monitor DDR and spot polling: The Due Date Rate is the average of Barabanki spot prices over the last three trading days. If near expiry, know this mechanism.

Include forecasts from IMD in calculations: Monsoon timing and its distribution play crucial roles in determining the sowing time and health of the crop in Uttar Pradesh. Before the harvest data is available, rainfall shortages or surpluses fluctuate prices.

Watch export order flows: Bulk sales of chewing gum and pharma products occur on a seasonal basis. Higher domestic availability results from major export orders and drives up prices.

Account for daily MTM and margin calls: Profits and losses are settled at MCX every evening. MENTHAOIL can gap on weather reports or pest outbreak news. Trade appropriately to avoid being called on margin. Don't always rely on just the minimum margin for sizing.

Check multiple chart timeframes: A trend visible on the daily chart may not match the one on the hourly chart. Align both before entering a position. Dhan charts offer custom timeframes and India-specific session overlays to match your trading style.

Use the Dhan Trade Plan for position sizing: Trade Plan is an integrated function in Dhan Charts. Enter your capital percentage, risk percentage and reward percentage. It automatically works out your quantity, stop-loss level and target price.

Settle the anticipated market price prior to the expiration date: A lot of the retail traders have no aim to take or make an actual delivery. Do not enter or exit on the last running day, as it can be a forced delivery day.

Size positions within capital limits: The ability to take a large position with a small margin is not a reason to do so. Do not take more than a certain percentage of risk on any single trade. Use the Trade Plan to enforce this discipline.