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Tom Lee, a currency speculator, sells 150 October futures contracts. The notional principal of each contract...

Tom Lee, a currency speculator, sells 150 October futures contracts. The notional principal of each contract is ¥12,500,000. The settlement price is $0.009593/¥. What is the value of his position at maturity if the ending spot rate is ¥110/$?

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Answer #1

150 shares.

Principal=12500000

Settlement price=0.009593 per Yen

Ending spot rate=110 per yen

Total Settlement price= 0.009593*150= 1.43895

Total ending spot price= 110*150=16500

= -12500000 +(16500-1.43895)

= -12500000+ 16498.56105

= -12,483,501 (Net Loss on Transaction)                                     

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