In which margin Profit & Loss in the contract are evaluated daily and settled by the exchange?InitialMaintainence MarginVariation MarginMark to Market

In the context of futures and options trading, daily evaluations of profits and losses are typically referred to as "Mark to Market" (MTM). This is the process by which the margin accounts of traders are adjusted every day based on the current market prices of the contracts they hold.

1. Initial Margin: This is the upfront amount that must be deposited to open a position. It serves as a performance bond to ensure the integrity of the trade.

2. Maintenance Margin: This is the minimum amount of equity that must be maintained in a margin account to keep a position open. If the account falls below this level, a margin call may occur.

3. Variation Margin: This refers to the funds that must be added or removed to maintain required margin levels due to daily price fluctuations.

4. Mark to Market: This is the process used by exchanges to value and settle profits and losses on a contract daily. The MTM process adjusts the trader’s account balance by adding or subtracting the daily price changes.

To summarize, profits and losses in contracts are evaluated daily and settled by the exchange through the "Mark to Market" process, ensuring that any gains or losses are realized and the required margin levels are maintained appropriately.