If you sold an S&P 500 Index futures contract at a price of 950 and closed your position when the index futures was 947, you incurred
A)a loss of $1,500.
B)a gain of $1,500.
C)a loss of $750.
D)a gain of $750.

Question

Quizplus · Accepted Answer

To calculate the profit or loss from trading futures contracts, we use the following formula:
Profit/Loss = (Entry Price - Exit Price) x Contract Size

In this case, the contract size is $50 per point of the S&P 500 Index. Therefore, the calculation will be:

Profit/Loss = (950 - 947) x $50
Profit/Loss = $150

Since we sold the futures contract at a higher price than we bought it, a positive number means we made a profit. Therefore, the correct answer is D) a gain of $750.

If You Sold an S&P 500 Index Futures Contract at a Price