NISM Certifications · NISM-Series-VIII: Equity Derivatives · Introduction to Clearing and Settlement System
A trader buys 100 units of a stock futures contract at Rs 500. The daily settlement price is Rs 508 on day 1 and Rs 503 on day 2. What is the cumulative mark-to-market profit or loss for the trader after day 2, ignoring charges?
The cumulative MTM is a profit of Rs 300. Day 1 gives a gain of Rs 800 as price rises from 500 to 508, and day 2 gives a loss of Rs 500 as it falls to 503. The net equals (503-500) x 100.
- AProfit of Rs 300Correct
- BProfit of Rs 800
- CLoss of Rs 300
- DProfit of Rs 500
Explanation
Day 1 MTM = (508-500)x100 = +800. Day 2 MTM = (503-508)x100 = -500. Net = 800-500 = +300, which equals (503-500)x100. Rs 800 ignores day 2's fall; Rs 500 ignores the day 1 gain; the loss option has the wrong sign.
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