On January 1, you sold one February maturity S&P 500 Index futures contract at a futures price of 2,422. If the futures price is 2,505 at contract maturity, what is your profit? The contract multiplier is $50. (Input the amount as positive value.)

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Business

Mario

27 March, 05:15

On January 1, you sold one February maturity S&P 500 Index futures contract at a futures price of 2,422. If the futures price is 2,505 at contract maturity, what is your profit? The contract multiplier is $50. (Input the amount as positive value.)

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Krystan · Answer 1

The loss will be $4,150.

Explanation:

As the investor sold S&P 500 futures contract, the investor has taken a short position in S&P 500 indexes.

At time of maturity, because the S&P index is higher than the future price (2,505 >2,422), the Investor has made a loss from the future contract.

The loss from the future contract is calculated as:

(S&P index at future maturity - S&P future price) x contract multiplier = (2,422 - 2,505) x 50 = $ (4,150)

Thus, the loss is $4,150.