NISM Certifications · NISM-Series-VIII: Equity Derivatives · Introduction to Clearing and Settlement System
A trader sells 1 lot of 500 units of a stock futures at Rs 400 and squares it off the same day at Rs 394, with no earlier position. The brokerage is ignored. What is the gain on the trade?
The gain is Rs 3,000. Selling at Rs 400 and buying back at Rs 394 earns Rs 6 per unit on a short position, and with 500 units in the lot the profit totals Rs 3,000.
- ARs 3,000Correct
- BRs 2,000
- CRs 3,000 loss
- DRs 6,000
Explanation
A short position gains when price falls. Gain per unit = 400 - 394 = Rs 6. Total = 6 x 500 = Rs 3,000. The loss option has the wrong sign.
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