How to trade silver micro futures on Zerodha
Silver Micro futures on MCX offer the smallest lot size in the MCX silver contract family: 1 kilogram per lot. Silver trades globally as both an industrial metal and a monetary metal, making its price more volatile than gold relative to its nominal value. The 1 kg Micro contract gives retail traders access to silver’s price movement with comparatively low capital, while the same compulsory-delivery obligation that applies to gold contracts applies here too.
Zerodha provides access through Kite once the commodity segment is activated.
Regulatory and tax framework
Exchange and regulator
MCX is a SEBI-regulated commodity derivatives exchange. SEBI’s jurisdiction over commodity derivatives was established following the FMC-SEBI merger in September 2015. Silver Micro futures trade under SEBI regulations and MCX bye-laws.
Zerodha’s MCX membership and the range of commodity instruments available are covered in Zerodha commodities and Zerodha commodity segment.
Commodity Transaction Tax
Silver futures attract Commodity Transaction Tax (CTT) at INR 10 per lakh of sell-side turnover, introduced by the Finance Act 2013, effective 1 July 2013. CTT is not applicable to currency derivatives or agricultural commodities.
Physical settlement mandate
SEBI circular SEBI/HO/CDMRD/DMP/CIR/P/2018/96 mandates compulsory physical delivery for MCX commodity derivatives including silver. The MCX delivery specification for Silver Micro requires 1 kg of silver with a minimum purity of 999 fineness (99.9%), delivered at an MCX-empanelled vault.
Contract specifications
| Parameter | Detail |
|---|---|
| Exchange | MCX |
| Contract | Silver Micro Futures |
| Lot size | 1 kg |
| Price quotation | INR per kg |
| Tick size | INR 1 per kg |
| Tick value | INR 1 x 1 = INR 1 per lot per tick |
| Contract months | Up to five monthly contracts |
| Last trading day | Fifth day of the contract month (or preceding business day) |
| Tender period | Begins approximately three business days before the last trading day |
| Settlement | Compulsory physical delivery at MCX-accredited vaults |
| Delivery unit | 1 kg per lot; silver must be 999 fineness |
| Trading hours | 9:00 AM to 11:30 PM IST (Monday to Friday) |
| Daily price limit | 4 percent initially; relaxed to 6 percent and then no limit if triggered |
For comparison, the Silver (standard) contract has a lot size of 30 kg, and the Silver Mini has a lot size of 5 kg. Silver Micro at 1 kg is the entry-level silver contract.
Step-by-step procedure
Step 1: Activate the commodity derivatives segment
Log in to Zerodha Console and navigate to Profile > Segments. If Commodity is not activated, click Activate and upload income proof if required. Refer to how to activate the commodity segment on Zerodha for the document checklist.
Step 2: Transfer sufficient funds
In Kite, go to Funds > Add funds and use UPI, NEFT, or IMPS. Add at least 15–20 percent above the margin requirement. Silver is volatile: on active days prices can move INR 2,000–5,000 per kg, requiring adequate margin to avoid an intraday RMS squareoff.
Step 3: Search for the Silver Micro contract
In the Kite search bar, type SILVERMIC and press Enter. Select MCX from the exchange filter. Contract names follow the format SILVERMIC26JUNFUT. Add the near-month contract to your watchlist.
Do not confuse with SILVERM (Silver Mini, 5 kg) or SILVER (standard, 30 kg). The margin and price-per-point impact differ substantially.
Step 4: Check the margin requirement
Navigate to zerodha.com/margin-calculator/SPAN/ and select the MCX tab. Choose SILVER MICRO, enter the number of lots, and read the margin figures.
At a silver price of approximately INR 90,000–1,00,000 per kg (illustrative), typical margin levels are:
| Lots | Approx. SPAN | Approx. Exposure | Approx. Total |
|---|---|---|---|
| 1 | INR 2,800–4,500 | INR 600–1,200 | INR 3,400–5,700 |
| 5 | INR 14,000–22,500 | INR 3,000–6,000 | INR 17,000–28,500 |
| 10 | INR 28,000–45,000 | INR 6,000–12,000 | INR 34,000–57,000 |
Silver is more volatile than gold on a percentage basis, and margins can be revised upward intraday by the exchange. See how to calculate SPAN margin on Zerodha and how to compute commodity margin on Zerodha for methodology.
Step 5: Place the order
Click the Silver Micro contract in your watchlist. Press B (buy) or S (sell).
In the order form:
- Product: NRML for overnight; MIS for intraday (auto-squareoff before MCX close).
- Order type: Limit (recommended) or Market.
- Quantity: in lots (each lot = 1 kg of silver).
- Price: in INR per kg, to the nearest tick (INR 1).
Example: if Silver Micro quotes at INR 95,200 per kg and you want to sell 3 lots short at limit INR 95,300, enter quantity 3 and price 95300 with order type Limit and direction Sell.
The order window shows the approximate margin blocked. Confirm execution in the Orders tab.
Step 6: Monitor the position and daily MTM
In the Positions tab, unrealised P&L is updated in real time:
- Long P&L per lot = Current price - Entry price (in INR per kg)
- Short P&L per lot = Entry price - Current price (in INR per kg)
Since the lot is 1 kg and the price is per kg, a INR 500 move equals INR 500 P&L per lot.
Daily MTM settlement credits or debits the ledger at the DSP (volume-weighted average price of the last 30 minutes of the evening session). Watch Available margin in Kite > Funds; if it approaches zero, an RMS squareoff is possible.
Step 7: Square off, roll, or accept delivery
To square off before the tender period, click Exit next to the position in Positions. Silver Micro’s last trading day is typically the fifth of the contract month. Square off at least three to five business days earlier.
To roll to the next contract month, square off the current contract and open a position in the next available expiry.
Physical delivery. If you hold a position into the tender period, MCX assigns delivery obligations. A long position must pay for and accept 1 kg of silver at an MCX vault; a short position must deliver 1 kg. For retail traders, this is logistically challenging and expensive. See how to handle commodity physical delivery risk on Zerodha.
Charges on MCX Silver Micro futures
| Charge | Rate |
|---|---|
| Brokerage (Zerodha) | INR 20 or 0.03% of turnover, whichever is lower, per order |
| CTT | INR 10 per lakh of sell-side turnover |
| STT | Nil on commodity futures |
| MCX transaction charge | Approximately INR 200 per crore of turnover |
| SEBI turnover fee | INR 10 per crore of turnover |
| GST | 18% on brokerage and transaction charges |
| Stamp duty | As per state of registration (typically INR 0.002 per lakh for futures) |
See Zerodha commodities and commodity transaction tax for current rates.
What can go wrong
- Wrong contract selected. SILVERMIC (1 kg), SILVERM (5 kg), and SILVER (30 kg) can appear in search results. Verify the lot size in the contract name and the order window before submitting.
- Industrial demand shocks. Silver’s industrial use in photovoltaic cells, electronics, and EV batteries means sudden demand news from these sectors can move prices. Industrial demand data is less predictable than gold’s monetary demand.
- US Federal Reserve guidance. Silver, like gold, reacts to US interest-rate expectations. A hawkish Fed statement can suppress precious metals prices sharply, even during intraday sessions.
- Delivery period entry. Silver Micro’s last trading day is the fifth of the month. Traders who miss the squareoff window face compulsory delivery, which requires accessing an MCX-empanelled vault. Zerodha’s RMS will attempt a forced squareoff but this may be at circuit limit prices.
- High MIS auto-squareoff risk. Zerodha’s intraday auto-squareoff for MCX positions occurs before the 11:30 PM close. Extended trading hours (into the evening) in MCX commodity contracts mean a position opened in the morning under MIS will be squared off in the late evening.
- Basis between Silver Micro and international silver. Domestic prices reflect import duty, USD/INR rate, and local supply-demand conditions, creating a basis versus the LBMA benchmark. This basis can widen or narrow unpredictably, especially during periods of import restriction.
Conflict-of-interest disclosure
The WebNotes Editorial Team has no financial relationship with Zerodha, MCX, or any commodity broker. No brokerage referral arrangement exists. Charge figures are drawn from publicly available exchange and broker documentation and may change; verify current rates before trading.
Related guides
- Zerodha commodity segment
- Zerodha MCX membership
- How to activate the commodity segment on Zerodha
- How to trade gold mini futures on Zerodha
- How to trade crude oil futures on MCX via Zerodha
- How to handle commodity physical delivery risk on Zerodha
- How to compute commodity margin on Zerodha
- How to calculate SPAN margin on Zerodha
- MCX
- Zerodha commodities
- Commodity transaction tax
- SEBI
- Kite, Zerodha’s trading platform
References
- MCX Contract Specifications: Silver Micro Futures, Multi Commodity Exchange of India Ltd, mcxindia.com.
- SEBI Circular SEBI/HO/CDMRD/DMP/CIR/P/2018/96 dated 12 June 2018, Compulsory delivery in commodity derivatives, Securities and Exchange Board of India.
- Finance Act 2013, Section 116, Commodity Transaction Tax, Ministry of Finance, Government of India.
- London Bullion Market Association (LBMA), Silver price benchmark methodology, lbma.org.uk.
- MCX Bye-Laws and Business Rules (current version), mcxindia.com.
- SEBI Circular SEBI/HO/CDMRD/DMP/CIR/P/2021/020, Margining framework for commodity derivatives, Securities and Exchange Board of India.
- Zerodha support article: “Commodity derivatives on Zerodha”, support.zerodha.com.