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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 Rs 22,000. At the end of day 1 the settlement price is Rs 22,060, and on day 2 the settlement price is Rs 22,020. What is the cumulative MTM position after day 2?

The cumulative MTM is a gain of Rs 2,000. With 100 units, day 1 gives a gain of Rs 6,000 and day 2 a loss of Rs 4,000, which nets to Rs 2,000, matching the total price change of Rs 20 times 100.

  1. AGain of Rs 2,000Correct
  2. BGain of Rs 6,000
  3. CGain of Rs 4,000
  4. DLoss of Rs 2,000

Explanation

Quantity is 2 x 50 = 100. Day 1 MTM = (22,060-22,000) x 100 = +6,000. Day 2 MTM = (22,020-22,060) x 100 = -4,000. Cumulative = +2,000, which equals (22,020-22,000) x 100. Rs 6,000 ignores day 2's loss.

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