(Yicai) June 12 -- The Zhengzhou Commodity Exchange, one of China’s three main commodity markets, will introduce options for dried jujube and flat glass.

When they start trading on June 21, the exchange will have a total of 18 options, it said yesterday. The others include white sugar, cotton, apples, and manganese silicon.

China has for years ranked first globally for the production and sales of dried jujube and flat glass, according to a source in the industry. The large number of related businesses and significant demand for hedging, combined with the big spot market, mean the new options will offer a more diverse and flexible risk management tool and help the high-quality development of related industries, they said.

The ZCE has already set the delivery months, trading fees, position limits, and trading instructions for the new options. For dried jujube the trading fee will be CNY1 (14 US cents) per lot, and that for flat glass will be 50 Chinese cents (7 US cents) per lot, with both exempt from the intraday trading fees for closing a position on the open of the first day.

The speculative position limit for non-futures company members and clients is 600 lots per dried jujube options contract and 20,000 lots per flat glass options contract. Their maximum purchase under a limit order is 100 lots, and that under a market order is two lots.

The listing price benchmarks for the new options are based on the option pricing model, which calculates the value of an options contract by assigning a price based on the probability that the contract will finish in the money at expiration, an insider at the ZCE revealed.

The exchange will announce the benchmark price of the dried jujube and flat glass options on its website after settlement on June 20.

Editor: Futura Costaglione