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 410. On day 2 the trader's position is still open and the daily settlement price is Rs 403. What is the MTM amount payable/receivable on day 2?
The trader pays Rs 7,000 on day 2. The position of 1,000 units is marked against the previous day's settlement price of Rs 410, and the fall to Rs 403 is a loss of Rs 7 per unit, which is debited as MTM.
- AReceivable Rs 7,000
- BPayable Rs 7,000Correct
- CPayable Rs 3,000
- DReceivable Rs 3,000
Explanation
Quantity = 2 x 500 = 1,000. Day 2 MTM is computed against previous settlement price: (403 - 410) x 1,000 = -Rs 7,000, so payable. Using the original price of 400 would give a wrong receivable of Rs 3,000 cumulative, not the day 2 amount.
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