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NISM Certifications · NISM-Series-VIII: Equity Derivatives · Basics of Derivatives

A trader sells 2 lots of a stock futures contract (lot size 500) at Rs 400. At the end of the day the futures settlement price is Rs 394. What is the daily mark-to-market amount for the trader?

The trader has a profit of Rs 6,000. The short position of 1,000 units gains Rs 6 per unit as the price fell from Rs 400 to Rs 394, so the daily mark-to-market is a credit of Rs 6,000.

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

Explanation

Quantity = 2 x 500 = 1,000 units. The short position gains when price falls: (400 - 394) x 1,000 = Rs 6,000 profit. Treating it as a loss reverses the sign; using only 500 units gives Rs 3,000.

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