General Queries
What is the MTM (Mark-to-Market) process in F&O?
The Mark-to-Market (MTM) process refers to the daily adjustment of unrealised profit or loss on open futures, based on the closing price declared by the exchange.
When is MTM done?
1. MTM is carried out at the end of every trading day.
2. The process applies to all open futures positions.
How MTM Works?
h6
threeCol
Segment
MTM Applicability
Basis of MTM
Freeze quantity (in lots)
Revised Freeze Limit (quantity)
(w.e.f. Feb 01, 2026)
Base Position Qty*
(A)
(A)
Contract Delta
(B)
(B)
FutEq Base position
(C)= (A)*(B)
(C)= (A)*(B)
Total FutEq Base Positions
(D) = Sum (C)
(D) = Sum (C)
Futures
Yes (both long and short)
Closing price of the futures contract
50
600
-10
1
-10
-5.20
Short Options
No
Theoretical premium as per exchange
30
1800
-10
0.52
-5.20
-5.20
Long Options
No
Maximum loss is limited to premium paid
30
1800
-10
0.52
-5.20
-5.20
Impact on Margin
1. MTM Profit → Added to your F&O Limit.
2. MTM Loss → Deducted from your F&O Limit or bank account.
If margin falls below the required level, you may need to add more funds or square off your position.
Carry Forward Mechanism
- After MTM adjustment, your positions are carried forward to the next day at the new settlement price.
Final Settlement
- MTM gains/losses are fully settled on expiry or on exercising the contract.