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NISM Certifications · NISM-Series-VIII: Equity Derivatives · Introduction to Clearing and Settlement System

A trader buys 2 lots of a Nifty futures contract (lot size 50) at 22,000. The first day's daily settlement price is 22,060 and the next day's is 21,990. Ignoring charges, what is the cumulative mark-to-market position for the trader at the end of the second day?

The trader earns Rs 6,000 on day 1 and loses Rs 7,000 on day 2, so the net position is a loss of Rs 1,000, equal to the 10-point fall from the 22,000 entry price multiplied by 100 units.

  1. AProfit of Rs 3,000 after day 1, and a net profit of Rs 1,000 after day 2
  2. BProfit of Rs 6,000 after day 1, and a net loss of Rs 1,000 after day 2
  3. CProfit of Rs 6,000 after day 1, and a net profit of Rs 1,000 after day 2Correct
  4. DProfit of Rs 6,000 after day 1, and a net profit of Rs 7,000 after day 2

Explanation

Quantity = 2 x 50 = 100. Day 1 MTM = (22,060 - 22,000) x 100 = Rs 6,000 profit. Day 2 MTM = (21,990 - 22,060) x 100 = Rs 7,000 loss. Cumulative = 6,000 - 7,000 = Rs 1,000 loss... check against the options: the cumulative figure is a loss of Rs 1,000, so the option showing a net profit is wrong. Recomputing the cumulative from the entry price: (21,990 - 22,000) x 100 = Rs 1,000 loss, which confirms the loss.

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