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NISM Certifications · NISM-Series-VIII: Equity Derivatives · Introduction to Clearing and Settlement System

A trader sells 3 lots of a stock futures contract (lot size 400) at Rs 500. The daily settlement price on that day is Rs 506. What is the MTM amount for the day for the trader?

The trader has an MTM loss of Rs 7,200. The position is short 1,200 units and the settlement price is Rs 6 above the sale price, so the seller pays Rs 6 times 1,200, which is Rs 7,200.

  1. ALoss of Rs 7,200Correct
  2. BGain of Rs 7,200
  3. CLoss of Rs 2,400
  4. DGain of Rs 2,400

Explanation

Quantity = 3 x 400 = 1,200. A short position loses when price rises: (500-506) x 1,200 = -7,200. Gain of 7,200 has the wrong sign; 2,400 uses one lot only.

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