Ad Free CAclubindia and Daily Updates on your Mobile. Subscribe Now!

Derivatives

santhosh (CA) (636 Points)

17 July 2009

Hi every one ,If Infy Stock Quotes today Rs 1985/-,If Infy 3 month Futures Price (today) is say 2015/-.Say i buy stock today and sell futures.Tomorrow stock price is say Rs 1994,What will be Futures price,will it be Rs 1985 (i.e MTM) or some other amount . I need a practical explanation and not what happens theoritcally.

Reply
Follow
Share

6 Replies

Krunal Raichura (Financial Advisory) (2134 Points)
Replied 17 July 2009

Futures price may not be 1985...because the pricing of Infy in the Futures market will be based on the trading of (demand and supply) Infosys in the futures market.

However, on the settlement date which in your case is 3 months from now...the stock price and the futures price have to be the same. Even if they are not the same, the settlement will be based on stock price and not of the futures price on expiry date...

Upgrade to CAclubindia Pro. Subscribe Now!

santhosh (CA) (636 Points)
Replied 17 July 2009

If pricing of Infy in the Futures market will be based on the trading of (demand and supply) Infosys in the futures market. Then how ill MArking to Market (i.e Making Future Price same as Stock PRice) be done.

Krunal Raichura (Financial Advisory) (2134 Points)
Replied 17 July 2009

Marking to Market will be done daily based on the closing price of Infy in the Futures Market. (Closing price is the weighted average price of Infy in the last 30 minutes of trade)

On the expiry date, the marking to market which will be the final settlement will be done on the basis of the closing price of the share in the equity market (cash segment). (In this case, closing price is the weighted average price of Infosys in the last 30 minutes of trade in the cash segment).