A trader enters into two short cotton futures contracts when the futures price is 80 cents per pound. The contract is for the delivery of 50,000 pounds. How much does the trader gain or lose if the cotton price at the end of the contract is (a) 77.20 cents per pound; (b) 82.30 cents per pound? a. If the cotton price at the end of the contract is 77.20 cents per pound, the gain/loss for the trader with the short position is: $____________ b. If the cotton price at the end of the contract is 82.30 cents per pound, the gain/loss for the trader with the short position is: $_____________
A trader enters into two short cotton futures contracts when the futures price is 80 cents per pound. The contract is for the delivery of 50,000 pounds. How much does the trader gain or lose if the cotton price at the end of the contract is (a) 77.20 cents per pound; (b) 82.30 cents per pound? a. If the cotton price at the end of the contract is 77.20 cents per pound, the gain/loss for the trader with the short position is: $____________ b. If the cotton price at the end of the contract is 82.30 cents per pound, the gain/loss for the trader with the short position is: $_____________
Chapter5: Currency Derivatives
Section: Chapter Questions
Problem 3IEE
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A trader enters into two short cotton futures contracts when the futures price is 80 cents per pound. The contract is for the delivery of 50,000 pounds. How much does the trader gain or lose if the cotton price at the end of the contract is (a) 77.20 cents per pound; (b) 82.30 cents per pound?
a. If the cotton price at the end of the contract is 77.20 cents per pound, the gain/loss for the trader with the short position is: $____________
b. If the cotton price at the end of the contract is 82.30 cents per pound, the gain/loss for the trader with the short position is: $_____________
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