NISM Certifications · NISM-Series-VIII: Equity Derivatives · Introduction to Clearing and Settlement System
A trader sells 2 lots of an index futures contract with lot size 50 at 20,000. The daily settlement price that day is 20,060. What is the MTM amount for the trader?
The trader pays Rs 6,000. The short position covers 2 x 50 = 100 units, and the settlement price is 60 points above the sale price, which is adverse for a seller. The loss is 60 x 100 = Rs 6,000.
- APays Rs 6,000Correct
- BReceives Rs 6,000
- CPays Rs 3,000
- DReceives Rs 3,000
Explanation
Quantity = 2 x 50 = 100 units. Price rose by 60, which is adverse for a short position, so loss = 60 x 100 = Rs 6,000 payable. Receiving Rs 6,000 has the wrong sign; Rs 3,000 uses only one lot's worth of units, i.e. 50.
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