Skip to content

NISM Certifications · NISM-Series-VIII: Equity Derivatives · Strategies using Equity Futures and Equity Options

A trader buys 2 lots of Nifty futures, lot size 75, at 22,400. The day's settlement price is 22,460, and the next day the trader squares off at 22,430. What is the total profit over the two days on the position, and what is the MTM cash flow on the second day?

The total profit is Rs 4,500 and the second-day MTM is a loss of Rs 4,500. Day one gains 60 points on 150 units, which is Rs 9,000, and day two loses 30 points, which is Rs 4,500; the net is Rs 4,500.

  1. AProfit Rs 4,500; second-day MTM loss Rs 4,500
  2. BProfit Rs 4,500; second-day MTM loss Rs 9,000
  3. CProfit Rs 9,000; second-day MTM loss Rs 4,500Correct
  4. DProfit Rs 9,000; second-day MTM loss Rs 9,000

Explanation

Quantity = 2 x 75 = 150. Total profit = (22,430 - 22,400) x 150 = Rs 4,500. Day 1 MTM = 60 x 150 = Rs 9,000 gain; day 2 = (22,430 - 22,460) x 150 = Rs 4,500 loss. So the total is 9,000 - 4,500 = 4,500 profit, not 9,000.

Did you get it right without looking?

One question tells you little. A timed set on Strategies using Equity Futures and Equity Options shows your real accuracy, how long you take and where you lose marks.

Practise Strategies using Equity Futures and Equity OptionsFree diagnostic mock

More Strategies using Equity Futures and Equity Options questions