Question

Suppose you sell seven August 2020 gold futures contracts one week ago, at a price of $1516 per ounce. The contract size of the futures is 100 ounce. If the spot gold price is $1745 and the gold futures price is $1710 today, what is your total profit or loss from this futures contract?

		-271600
		-160300
		135800
		-135800
		160300

Answer 1

Solution:

Gold futures contracts sold at $1516 per ounce.

The contract size is 100 ounce.

Gold futures price as on today is $1710

Profit or loss from one futures contract: (Future Contract sold Price - Future Contract today) * Contract size

Profit or loss from one futures contract: ( $1,516 - $ 1,710) * 100

Profit or loss from one futures contract: $ 194 * 100

Profit or loss from one futures contract: $ - 19400

Hence, Profit or loss from 7 futures contract: $ -19400 * 7 = $ - 135,800

The correct answer is $ option (d) i.e. $ -135,800

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