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NISM Certifications · NISM-Series-VIII: Equity Derivatives · Introduction to Forwards and Futures

A trader buys 2 lots of Nifty futures at 22,000 with a lot size of 75. At the end of day 1 the settlement price is 22,060, and at the end of day 2 it is 22,020. What is the cumulative mark-to-market position for the trader after day 2?

The cumulative MTM is a profit of Rs 3,000. The trader holds 150 units; the day 1 gain of 60 points gives Rs 9,000, the day 2 fall of 40 points costs Rs 6,000, leaving a net gain of Rs 3,000.

  1. AProfit of Rs 3,000Correct
  2. BProfit of Rs 9,000
  3. CLoss of Rs 3,000
  4. DProfit of Rs 4,500

Explanation

Quantity = 2 x 75 = 150. Day 1 gain = 60 x 150 = Rs 9,000. Day 2 loss = 40 x 150 = Rs 6,000. Net = 9,000 - 6,000 = Rs 3,000 profit, which equals (22,020 - 22,000) x 150. Rs 9,000 ignores day 2's loss.

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