Skip to content

NISM Certifications · NISM-Series-VIII: Equity Derivatives · Strategies using Equity Futures and Equity Options

A trader sells one lot of stock futures at Rs 500. The lot size is 1,000 shares. The daily settlement prices are Rs 495 on day 1 and Rs 508 on day 2. What is the cumulative MTM position after day 2?

The cumulative result is a loss of Rs 8,000. The short futures was sold at 500 and the day 2 settlement is 508, so the price rose by 8 per share, which on 1,000 shares is Rs 8,000 against the seller.

  1. AProfit of Rs 8,000
  2. BLoss of Rs 8,000Correct
  3. CProfit of Rs 5,000
  4. DLoss of Rs 13,000

Explanation

For a short position, loss = (settlement - sale price) x lot size. Day 1: (500-495) x 1,000 = +5,000 profit. Day 2: (495-508) x 1,000 = -13,000. Cumulative = 5,000 - 13,000 = -8,000, equal to (500-508) x 1,000, a loss of Rs 8,000.

Did you get it right without looking?

One question tells you little. A timed set on Strategies using Equity Futures and Equity Options shows your real accuracy, how long you take and where you lose marks.

Practise Strategies using Equity Futures and Equity OptionsFree diagnostic mock

More Strategies using Equity Futures and Equity Options questions