You buy 15 wheat futures contracts when the futures price is $2.61 per bushel (each contract is for 5,000 bushels). The price on the maturity date is $2.21. What is your payoff?
A) -$30,000
B) -$2,000
C) $0
D) $2,000
E) $30,000

Question

Quizplus · Accepted Answer

The payoff from a futures contract is the difference between the contract price and the price at maturity, multiplied by the number of contracts and the size of each contract. Here, the loss per bushel is $2.61 - $2.21 = $0.40. For 15 contracts of 5,000 bushels each, the total loss is $0.40 * 15 * 5,000 = $30,000.

You Buy 15 Wheat Futures Contracts When the Futures Price