Skip to content

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

A trader buys 2 lots of Nifty futures (lot size 50) at 22,000. The day's settlement price is 22,060. The next day's settlement price is 21,980. What is the cumulative MTM profit or loss for the trader at the end of day 2?

The cumulative result is a loss of Rs 2,000. The trader holds 100 units, gains Rs 6,000 on day one when price rises 60 points, then loses Rs 8,000 on day two when it falls 80 points, giving net 20 points below entry times 100.

  1. ALoss of Rs 2,000
  2. BProfit of Rs 2,000Correct
  3. CProfit of Rs 8,000
  4. DProfit of Rs 6,000

Explanation

Quantity = 2 x 50 = 100. Day 1 MTM = (22,060 - 22,000) x 100 = +6,000. Day 2 MTM = (21,980 - 22,060) x 100 = -8,000. Net = -2,000, a loss. Re-check: (21,980-22,000) x 100 = -2,000. So the loss of Rs 2,000 is correct.

Did you get it right without looking?

One question tells you little. A timed set on Introduction to Forwards and Futures shows your real accuracy, how long you take and where you lose marks.

Practise Introduction to Forwards and FuturesFree diagnostic mock

More Introduction to Forwards and Futures questions