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 |
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4000 |
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13000 |
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26000 |
||
-4000 |
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 | |||||||
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