Mark to Market (MTM) in a futures contract is the process of daily settlement of profit and losses arising due to the change in the security’s market value until it is held.
The MTM calculations are done daily after the trading hours, based on the closing price for the day. The P&L is settled on the same day to your trading account and won’t reflect in your positions on the next day.
To verify the values of your futures contract position, you use the below formulas:
- Change in futures contract value. = Future contract Price of Current Day – Closing Price as of Prior Day
- P&L for the day = Price Change in futures contract value * Number of lots
- Total P&L = the sum total of all the daily P&L until the futures contract position is held.
You will have to pay the MTM loss along with balance margin within two trading days (T+2).