What is Mark To Market (MTM)?
Mark to Market (MTM) for the futures segment is the process of daily profit/loss settlement arising as a result of changes in the market value of the contract.
MTM calculations are done daily after trading hours based on the previous and current day's closing prices. Any MTM profits from futures positions will be credited to your ledger, and losses debited.
MTM = (Current day's closing price - Previous day's closing price) * Number of lots
For example, Ms. Shanti buys 1 lot (50 units) of NIFTY futures @ Rs. 18,000
| Day | Previous Closing Price | Today's Closing Price | Daily MTM (Lot size x Profit/Loss) |
|---|---|---|---|
| 1 | 18,000 | 18,200 | 10,000 |
| 2 | 18,200 | 17,900 | (15,000) |
| 3 | 17,900 | 18,100 | 10,000 |
| Total P&L | 5,000 |
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