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

A trader buys 3 lots of a stock futures at Rs 500 (lot size 400). The initial margin is 12% of contract value. On day one the futures settles at Rs 485. If the maintenance is ignored and the trader keeps only the initial margin deposited, what is the trader's margin balance after MTM debit?

The balance is Rs 54,000. Initial margin is 12% of Rs 6,00,000, which is Rs 72,000, and the long position loses Rs 15 on 1,200 units, which is Rs 18,000, debited from the margin account.

  1. ARs 72,000
  2. BRs 54,000Correct
  3. CRs 90,000
  4. DRs 36,000

Explanation

Contract value = 3 × 400 × 500 = Rs 6,00,000; initial margin 12% = Rs 72,000. MTM loss = (500 − 485) × 1,200 = Rs 18,000. Balance = 72,000 − 18,000 = Rs 54,000. Rs 72,000 ignores the loss; Rs 90,000 adds it wrongly.

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