Question

Suppose you sell five August 2020 gold futures contracts one week ago, at a price of $1692 per ounce. The contract size of the futures is 100 ounce. If the spot gold price is $1700 and the gold futures price is $1666 today, what is your total profit or loss from this futures contract?

		-13000
		4000
		13000
		26000
		-4000

Answer 1

The profit or loss from future contract is calculated as spot price at expiry of contract less the future contract value
The spot price is higher than the future contract amount and thus there is loss on future contract as gold is sold at lower price
Profit or loss on future contract	(1692*5*100)-(1700*5*100)
Profit or loss on future contract	846000-850000
Profit or loss on future contract	-$4,000
Thus, loss on future contract is -$4,000