Question

this is concerning Q.6 chap 1 of Options, futures and other derivatives, 10th ed of John Hull;

how come we do not consider the marking to market on futures contract?

wouldn't a trader with a short position on a futures, (takes short position at 50$), be losing money, if futures Price at maturity is 48.5 ?

Answer 1

Given
	50000	pounds
No. of futures contracts shorted	50000
Agreed future price	50
	a)	Future spot price		48.2
		Gain	=(50-48.2)*50000
			90000
	b)	Future spot price		51.3
		Loss	=(51.3-50)*50000
			65000

Please understand that in futures contract the MTM happens on a daily basis. Here the assumption is that on the last day of trade is that the value of spot is 48.5 so what will be the net MTM of that day.

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