NISM Certifications · NISM-Series-VIII: Equity Derivatives · Introduction to Clearing and Settlement System
A trader buys 2 lots of a stock futures contract (lot size 500) at Rs 400. The daily settlement price on day 1 is Rs 408 and on day 2 is Rs 403. What is the cumulative MTM position at the end of day 2?
The cumulative MTM is a profit of Rs 3,000. The position is 1,000 units bought at Rs 400 and the latest settlement price is Rs 403, so the gain is Rs 3 per unit, being the day 1 gain of Rs 8,000 less the day 2 loss of Rs 5,000.
- AProfit of Rs 3,000Correct
- BProfit of Rs 8,000
- CLoss of Rs 3,000
- DProfit of Rs 5,000
Explanation
Quantity is 2 x 500 = 1,000 units. Day 1 MTM is (408-400) x 1,000 = Rs 8,000 profit. Day 2 MTM is (403-408) x 1,000 = Rs 5,000 loss. Net is Rs 3,000 profit, which equals (403-400) x 1,000. Rs 8,000 ignores day 2's fall.
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