NSE Commodities lists options on its WTI Crude Oil futures and Natural Gas futures — symbols CRUDEOIL and NATURALGAS, the same symbols as the underlying futures. They are European-style options, which means they can be exercised only on the expiry date, and on expiry an in-the-money position turns into a position in the underlying futures contract.
What is the underlying?
Each option's underlying is the corresponding NSE futures contract, not the physical commodity:
- CRUDEOIL — options on NSE's WTI crude oil futures. WTI is the US crude benchmark, so this contract gives Indian traders a direct handle on the global oil price in rupees.
- NATURALGAS — options on NSE's natural gas futures, which track the international gas benchmark (the US Henry Hub market).
One option contract covers one underlying futures contract, so the futures spec is what decides the size of what you end up holding:
| Underlying futures | Lot size | Quote | Tick size |
|---|---|---|---|
| WTI Crude Oil (CRUDEOIL) | 100 barrels | ₹ per barrel | ₹1 |
| Natural Gas (NATURALGAS) | 1,250 mmBtu | ₹ per mmBtu | ₹0.10 |
Both futures are cash settled: the final settlement price is the front-month settlement price on the US futures market, converted to rupees at the RBI USD-INR reference rate and rounded to the nearest tick. NSE also lists smaller variants of both futures — CRUDEOILM (10 barrels) and NATGASMINI (250 mmBtu) — but the options are listed on the main contracts.
For what moves these underlying prices, see what moves crude oil and natural gas prices; for how options work in general, start with what are call and put options.
What are the key contract terms?
| Parameter | CRUDEOIL options | NATURALGAS options |
|---|---|---|
| Style | European (exercisable only at expiry) | European |
| Underlying quote | ₹ per barrel | ₹ per mmBtu |
| Tick size | ₹0.10 | ₹0.05 |
| Strike interval | ₹50 | ₹5 |
| Expiry | Seven business days before the underlying futures contract's expiry | Four business days before the underlying futures contract's expiry |
Note the two different expiry rules — the crude option stops trading seven business days before its futures contract does, the gas option four. Both expire earlier than the futures, which is the point: the option has to settle into a futures position that still has life left in it.
What happens on expiry?
This is the part that surprises option traders coming from equities. An in-the-money position doesn't settle into cash — it devolves into the underlying futures contract at the strike price:
| Your expiring position | You receive |
|---|---|
| Long call | Long futures |
| Long put | Short futures |
| Short call | Short futures |
| Short put | Long futures |
So if Vikram holds an in-the-money CRUDEOIL call at expiry, he wakes up with a long WTI futures position of 100 barrels — which carries full futures margin and keeps moving with the market until he squares it off. If you don't want a futures position, exit the option before expiry. This is the same devolvement idea covered in what are commodity options.
Things to keep in mind
- European style — no early exercise; the option's value until expiry comes from trading it, not exercising it.
- Devolvement is the default, and the futures position it creates needs futures-level margin — know your plan before expiry day, not on it.
- These contracts track global energy benchmarks, so the big moves often come in the Indian evening session, when US markets are active — see the commodity market trading hours.
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