Asked by Jeancarlos Chavarro on Jul 11, 2024
Verified
On April 1, you bought one S&P 500 Index futures contract at a futures price of 1,550. If, on June 15, the futures price was 1,612, what would be your profit (loss) if you closed your position (without considering transactions costs) ?
A) $1,550 loss
B) $15,550 loss
C) $15,550 profit
D) $1,550 profit
S&P 500 Index
A market index observing the activity of the top 500 large-scale corporations traded on US stock exchanges.
Futures Price
The agreed price for the assets to be traded in the future as determined in a futures contract.
Profit
The financial gain obtained when the revenue generated from business activities exceeds the expenses, costs, and taxes needed to sustain the activity.
- Acquire knowledge on how profit and loss operate in futures trading.
Verified Answer
KC
Keenan ConatyJul 12, 2024
Final Answer :
C
Explanation :
The profit from the futures contract is calculated by taking the difference between the selling price and the buying price, then multiplying by the contract multiplier (which is typically $250 for S&P 500 Index futures). Therefore, the profit is (1,612 - 1,550) * $250 = 62 * $250 = $15,550.
Learning Objectives
- Acquire knowledge on how profit and loss operate in futures trading.