NISM Certifications · NISM-Series-VIII: Equity Derivatives · Accounting and Taxation
A trader buys 1 lot (lot size 200) of a stock futures contract at Rs 500. At the end of day 1 the settlement price is Rs 506, and the next day the trader sells at Rs 503. What is the total profit actually recognised over the two days, and what is the day-1 MTM credit?
The day-1 MTM gain is Rs 1,200 (6 points times 200), and the day-2 loss is Rs 600 (3 points times 200). The net profit over both days is Rs 600, which matches the direct difference between sale price 503 and purchase price 500 times 200.
- ATotal Rs 600; day-1 MTM Rs 1,200Correct
- BTotal Rs 1,200; day-1 MTM Rs 600
- CTotal Rs 600; day-1 MTM Rs 600
- DTotal Rs 1,200; day-1 MTM Rs 1,200
Explanation
Day-1 MTM = (506-500) x 200 = Rs 1,200 credit. Day 2: (503-506) x 200 = -Rs 600. Total = 1,200 - 600 = Rs 600, which equals (503-500) x 200. Option with total 1,200 ignores the day-2 loss.
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