Loading...
CFA Level 1
Derivatives

Futures Contract Profit Calculation

Hard Derivative Pricing And Valuation Futures Contracts

In a futures contract, the price at which the underlying asset will be bought or sold is determined at the initiation of the contract. A trader believes that the current futures price of $100 for a commodity will decrease over the next month. To capitalize on this expectation, they decide to take a short position in the futures contract. One month later, the futures price decreases to $90.

What is the profit or loss that the trader realizes from the short position in the futures contract?

Hint

Submitted5.2K
Correct3.9K
% Correct77%