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NISM Certifications · NISM-Series-VIII: Equity Derivatives · Trading Mechanism

A trader buys 2 lots of a stock futures contract, lot size 500, at Rs 400. The previous day's settlement price was Rs 396 and the day's closing settlement price is Rs 405. What is the MTM profit on this new trade for the day?

The MTM profit is Rs 5,000. For a position opened on the same day, the base is the buy price of Rs 400, not the previous settlement price. The gain of Rs 5 per unit on 1,000 units gives Rs 5,000.

  1. ARs 4,000
  2. BRs 5,000Correct
  3. CRs 9,000
  4. DRs 4,500

Explanation

For a position opened today, MTM uses the trade price, not the previous settlement price. Quantity = 2 x 500 = 1,000 units, so profit = (405 - 400) x 1,000 = Rs 5,000. Using 396 as base gives Rs 9,000, which is wrong.

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