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

A trader sells one lot of 50 units of a Nifty futures contract at 22,000. On expiry the final settlement price is 21,900. What is the cash settlement amount for the trader?

The trader receives Rs 5,000. A short futures position profits when the final settlement price falls, and the fall of 100 points multiplied by the 50-unit lot size gives a cash gain of Rs 5,000.

  1. APays Rs 5,000
  2. BReceives Rs 5,000Correct
  3. CReceives Rs 50
  4. DPays Rs 50

Explanation

A short position gains when the price falls. Gain = (22,000-21,900) x 50 = 100 x 50 = Rs 5,000, received in cash. Paying Rs 5,000 reverses the sign of the result.

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