Budapest — The Singapore Exchange (SGX) saw its first few coking coal options contract traded Monday and last Friday. Q1 2018 contracts with $195 strike calls saw 30,000 mt traded at $7.60 premium last Friday. Another 150,000mt of Q1 2018 contracts were traded on Monday, with strike calls at $195 and a premium of $7.60.
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This comes on the back of strong activity in the SGX paper market. The traded volume of coking coal swaps on the SGX spiked to 12.8 million mt over January-October, more than double the combined volume of swaps traded on both the SGX and Chicago Mercantile Exchange in full-year 2016, data gathered by S&P Global Platts showed.
Over the past year, higher liquidity was seen in coking coal swaps volume and market participants were also more keen on risk management strategies.
"The coking coal options were launched to enhance the suite of risk management tools available to the market. We are pleased to have cleared the world's first coking coal option this week and look forward to developing the volume in the options and underlying futures market," said Jin, director at SGX said.
"SGX addition of options to their product suite was the next logical step and I would expect that now the first trade has broken the ice, we will start to see more over the coming months" said Henry Herbet, a broker for coking coal and steel derivatives at GFI Group.
SGX's coking coal swaps volume traded from 1 November to 13 November stands at 450,700 mt while open interest at 1.19 million mt, according to SGX's data.
SGX coking coal swaps and options contracts are settled against TSI's Australian Premium Hard Coking Coal FOB index, a pricing unit under S&P Global Platts.
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