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Sir, in daikon Qs in the following they have taken difference of opening and closing price, and then have multiplied it number of contracts (50) and tick size value (25)
(95·76 – 95·84) x $25 x 50 contracts
However, in Boullain Qs they have not done this same treatment as above. I mean to ask that here they should also take difference of opening and closing price and then multiply it by number of contracts (81) and tick size value of 0.001. But examiner has done the following and I do not understand it
((1·1410 – 1·1422)/0·0001) x $20 x 81
They have done exactly the same in both cases.
Did you check the arithmetic in Daikon? Despite what was written the calculation is
((95.76 – 95.84) / 0.01) x $25 x 50 =10,000 lossHave you watched my free lectures on all of this, because although I explain ticks you never actually need to use them in the exam – it is whatever you find easier 🙂
It is the tick size multiplied by the contract size. 0.0001 x $200,000 = $20.
I asked if you had watched my lectures – you did not reply but it seems that you obviously have not.
Sir I have watched your interest rate lectures. But I am having issues in mark to market settlement Questions e.g the above 2 questions. Sir in your notes and lectures on which page and lecture number the mark to mark settlement questions are present so i can go through it?
I do not work through an example of mark to market calculations (because they are rarely asked and never carry that many marks) but I do explain how tick values are calculated and I do explain the fact that the margin will be adjusted as the futures price changes (and it is the same for both foreign exchange futures and interest rate futures).
Ok sir now last 1 Qs related to this , that what I have analyzed so far that in MTM settlement Qs, in order to calculate gain or loss, we will take the difference of opening and closing price and divide it by tick size. Then we will multiply the resulting answer of this by number of contracts and tick value. And in case if tick value is not given in Qs then we will calculate the tick value as contract size multiplied by tick size. Right?
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