Question

Suppose you purchase two September 2020 cotton futures contracts on this day, at a price of $4.357 per bushel. The contract size of the futures is 20 bushel. What will your profit or loss be if corn prices turn out to be $6.281 per bushel at expiration?

		-76.96
		3.848
		153.92
		-38.48
		76.96

Answer 1

The price of bushel at expiration increases and future contract purchase price is lower then in this case the future contract would result in profit
No of bushels purchased in future contract	20*2
No of bushels purchased in future contract	40
Value of future contract (40*4.357)	$174.28
Value of bushel at expiry of contract (40*6.281)	$251.24
Profit from future contract	251.24-174.28
Profit from future contract	$76.96
The future contract would result in profit of $76.96