Question

Suppose that in September you take a short position in a contract on crude oil futures...

Suppose that in September you take a short position in a contract on crude oil futures that expires the next May. You close out your position in March. The futures price is $50.50 per barrel when you enter into your contract, $49.30 when you close out your position, and $48.50 at the end of December. One contract is for the delivery of 1,000 barrels. (1 point) What is your total profit? (3 points) How are you taxed if you are: (a) a hedger; (b) a speculator?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose that on March 1 you take a short position in a June crude oil futures...
Suppose that on March 1 you take a short position in a June crude oil futures contract at $20/barrel (contract size=1,000 barrels) a. How much cash or risk-free securities would you have to deposit to satisfy an initial margin requirement of 5% of the contract value? b. If the maintenance margin is 3% of the contract value. Calculate the values of your margin account on the following days and identify when you will receive the margin calls, given the following...
You go long on 50 oil futures contracts on NYMEX when the futures price of oil...
You go long on 50 oil futures contracts on NYMEX when the futures price of oil is $80 a barrel and close out your position three days later at a futures price of $84 a barrel. One future contract is for 1,000 barrels. What are your gain or losses
A trader plans to buy three Aug. crude oil futures contracts. Each contract is for the...
A trader plans to buy three Aug. crude oil futures contracts. Each contract is for the delivery of 1,000 barrels of crude oil. The current futures price is $50 per barrel, the initial margin is $8,000 per contract, and the maintenance margin is $6,000 per contract. (a) What price change would lead to a margin call? (F=$?) (b) Under what circumstances could $4,500 be withdrawn from the margin account? (F=$?) Please give me the process, thank you!
Let us pretend that today was in Oct. 2019. The crude oil futures contract would mature...
Let us pretend that today was in Oct. 2019. The crude oil futures contract would mature one year later, Oct. 2020; Each contract consists of 1,000 barrels, with "Multiplier" = 1000.00; Each contract requires $4,180.00 as the initial margin for traders to long (i.e., "buy on margin") or short, with "Margin" = 4180.00; No matter you long or short this commodity today, assume that the price can be settled at $50.68 per barrel, with "Last Price" = 50.68; Your specific...
Let us pretend that today was in Oct. 2019. The crude oil futures contract would mature...
Let us pretend that today was in Oct. 2019. The crude oil futures contract would mature one year later, Oct. 2020; Each contract consists of 1,000 barrels, with "Multiplier" = 1000.00; Each contract requires $4,180.00 as the initial margin for traders to long (ie., "buy on margin") or short, with "Margin" = 4180.00; No matter you long or short this commodity today, assume that the price can be settled at $50.68 per barrel, with "Last Price" = 50.68; Your specific...
The spot price of light, sweet crude oil is $96.24 per bbl., and the futures price...
The spot price of light, sweet crude oil is $96.24 per bbl., and the futures price of the NYMEX March light, sweet crude oil futures contract is $96.37 per bbl. This contract expires in 4 months. The continuously compounded 4-month risk-free rate is 2.56% per year. The storage cost is $1.22 per barrel for 4 months, payable in advance. What is the arbitrage profit per 1,000 bbl.? Ignore transactions costs.
Consider a forward contract for 1,000 barrels of crude oil with one year to delivery. The...
Consider a forward contract for 1,000 barrels of crude oil with one year to delivery. The current spot price of oil is $60 per barrel, oil costs $4 per barrel to store for a year (paid in advance), and the risk-free rate is 5% annually. Assume that there are no benefits to holding oil at the current time. What is the fair price for the forward contract? Give your answer in dollars per barrel, round to the nearest penny.
You are an oil producer and you believe that oil prices are so insane these days...
You are an oil producer and you believe that oil prices are so insane these days they ought to decline in the medium- to long-run. You see a December light sweet crude futures settling at $109 a barrel. The contracts are for 1000 barrels each. You decide to hedge 10,000 barrels of your reserves with this futures contract. a. Under each of the following scenarios, show the value of your futures position, the value of your oil position, and the...
In October 2018, an investor entered a short position in forward on crude oil for delivery...
In October 2018, an investor entered a short position in forward on crude oil for delivery in October 2021. At that time, the spot price of crude oil was $70 per barrel and the risk-free rate of interest was 2% per annum. Currently, in October 2020, the spot price of crude oil is $40 per barrel and the risk-free rate of interest is 1% per annum. What is the value of the short position in the forward?
Suppose you short one futures contract of Brent Crude for August delivery and lock into F0...
Suppose you short one futures contract of Brent Crude for August delivery and lock into F0 = $28.00. Suppose the initial margin requirement for the oil contract is 12%. Let's now assume that the price of Brent Crude takes a steady decline over the course of your time horizon. Assume that at maturity, ST = $18.50. b. Would you expect to have a margin call during your time horizon given the information above? Why or why not?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT