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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 21,980. What is the cumulative MTM position after day 2 (gain or loss)?

The cumulative position is a loss of Rs 3,000. The trader holds 150 units, and the price moved from 22,000 to 21,980, a fall of 20 points, so 20 x 150 equals Rs 3,000 loss, the net of day 1 gain and day 2 loss.

  1. AGain of Rs 3,000
  2. BLoss of Rs 3,000Correct
  3. CGain of Rs 12,000
  4. DLoss of Rs 12,000

Explanation

Quantity = 2 x 75 = 150 units. Day 1 gain = 60 x 150 = Rs 9,000. Day 2 loss = 80 x 150 = Rs 12,000. Net = 9,000 - 12,000 = loss of Rs 3,000. Check: (21,980 - 22,000) x 150 = -3,000. The Rs 12,000 loss option ignores the day 1 gain.

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