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

A trader buys 2 lots of Nifty futures, each lot of 75 units, at 24,000. The day's settlement price is 24,060. On the next day the trader squares off at 24,020. What is the trader's MTM on the second day?

The trader has a loss of Rs 6,000 on the second day. MTM for a position carried overnight is computed against the previous day's settlement price, so 24,020 minus 24,060 equals a fall of 40 points. Multiplied by 150 units (2 lots of 75), this gives Rs 6,000.

  1. AProfit of Rs 6,000
  2. BLoss of Rs 6,000Correct
  3. CLoss of Rs 3,000
  4. DProfit of Rs 9,000

Explanation

On day 2 the MTM is measured against the previous settlement price: (24,020 - 24,060) x 150 units = -40 x 150 = -Rs 6,000. Option 0 flips the sign, and option 2 uses a single lot. Option 3 uses the original buy price for the profit over the whole period, which is not day 2's MTM.

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