Skip to content

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

An investor buys one lot of 500 shares of a stock futures contract at Rs 800. The daily settlement prices are Rs 810 on day 1 and Rs 795 on day 2. The investor squares off on day 3 at Rs 805. What is the total net profit or loss across the three days?

The investor makes a net profit of Rs 2,500. Daily MTM gives +5,000, -7,500 and +5,000, which sum to 2,500, matching the overall price gain of Rs 5 per share on 500 shares from 800 to 805.

  1. AProfit of Rs 2,500Correct
  2. BProfit of Rs 5,000
  3. CLoss of Rs 2,500
  4. DProfit of Rs 7,500

Explanation

Day 1 MTM = (810-800)x500 = +5,000. Day 2 MTM = (795-810)x500 = -7,500. Day 3 = (805-795)x500 = +5,000. Net = 5,000 - 7,500 + 5,000 = +2,500, which equals (805-800)x500 as a check.

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