The Shanghai Futures Exchange ("SHFE") has recently enacted and issued the Gold Futures Options Contract (Draft for Comment) (the "Draft for Comment") to seek comments from the industry by November 18, 2019.
According to the Draft for Comment, the trading unit of the gold options contract is 1,000 grams per gold futures contract; the minimum price fluctuation is CNY0.02/g; the up and down limit range should be same as that for the gold futures contract; and the exercise price is within the up or down limit range on the current day, and 1.5 times up or down of the settlement price of the prior trading day for the gold futures contract. Where the exercise price is not higher than CNY200/g, the gap between two prices should be CNY2/g; where the exercise price is higher than CNY200/g but not higher than CNY400/g, the gap between two prices should be CNY4/g; where the exercise price surpasses CNY400/g, the gap between two prices should be CNY8/g. The right should be exercised through European options, which means that the buyer may file an application for exercising or waiving its right, prior to 15:30 on the maturity date.