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 404. What is the daily MTM on the trade on the day of purchase?
The profit is Rs 4,000. On the day of purchase MTM uses the trade price, so the gain is Rs 4 per unit on 1,000 units.
- AProfit of Rs 4,000
- BProfit of Rs 8,000Correct
- CLoss of Rs 4,000
- DProfit of Rs 2,000
Explanation
On the day of purchase, MTM is computed against the trade price: (404 - 400) x 500 x 2 = Rs 4,000. Wait, quantity is 2 lots x 500 = 1,000 units, so 4 x 1,000 = Rs 4,000. The Rs 8,000 figure would come from using 2,000 units, so it is wrong.
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