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

A trader sells 2 lots of a stock futures (lot size 500) at Rs 200. If the futures settles at Rs 190 at expiry, the trader's profit or loss is:

The trader earns a profit of Rs 10,000. A short futures position gains when the price falls, here by Rs 10 per share, and two lots of 500 means 1,000 shares, so the total gain is 10 times 1,000.

  1. ALoss of Rs 5,000
  2. BProfit of Rs 5,000
  3. CProfit of Rs 10,000Correct
  4. DLoss of Rs 10,000

Explanation

A short position gains when price falls. Gain per share = 200-190 = Rs 10; quantity = 2 x 500 = 1,000 shares; profit = Rs 10,000. Rs 5,000 uses only one lot, and loss options have the wrong sign.

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