Question

If you are in the buy position of a futures contract,

Group of answer choices

you gain when the underlying asset price goes up

you gain when the underlying asset price goes down

you always gain

you lose when the underlying asset price goes up

you neither lose or gain

Answer 1

The Future Contracts derive it's value from the underlying Assets. When you are in a long position, If the price goes up, the Future Value goes up and vice-versa.

So if you buy future contract you gain when the stock prices goes up.

Option A is correct. You gain when the underlying asset price goes up.

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