Futures contracts on gold are based on 100 troy ounces and priced in dollars per troy ounce. Assume the January gold contract settled today at 1285.10 and opened at 1284.60. The April contract settled at 1285.30 and opened at 1285. You own four of the April contracts that you purchased at 1284.70. What is your total profit or loss to date?
A) $160
B) $240
C) $40
D) $120
E) $60

Question

Quizplus · Accepted Answer

To calculate the profit or loss, we need to use the formula:

Profit/Loss = (Settlement Price - Purchase Price) x Contract Size x Number of Contracts

For the April contract, the settlement price is 1285.30 and the purchase price is 1284.70:

Profit/Loss = (1285.30 - 1284.70) x 100 x 4 
Profit/Loss = 0.6 x 400 
Profit/Loss = $240

Therefore, the total profit or loss to date is $240.

Futures Contracts on Gold Are Based on 100 Troy Ounces