Question

Suppose you sold three September cocoa futures contracts at a price quote of 1,696. Cocoa futures contracts are based on 10 metric tons and priced in dollars per ton. What will be your profit or loss on this contract if the price turns out to be $1,707 per metric ton at expiration

Answer 1

Answer:

Loss in the contract = -$330.

Explanation:

Selling price per futures contract = $1,696

Current Value of the future contract = $1,707

Since the price has increased, there is a loss.

Loss per contract - 1696 - 1707 = -11

Total loss in the trade = -11 * 10 (size of contract) * 3 (Number of contracts) = -$330