The payoffs to both long and short position in the forward contact are symmetric around the contract price.

Question

Quizplus · Accepted Answer

The payoffs to both long and short positions in a forward contract are symmetric around the contract price. This means that if the contract price is below the spot price at expiration, the long position will have a positive payoff (profit) while the short position will have a negative payoff (loss), and vice versa if the contract price is above the spot price. The magnitudes of the payoffs and losses are equal and the opposite for both positions, resulting in a symmetric payoff diagram.

The Payoffs to Both Long and Short Position in the Forward