If you sell in April a stock index future contract on the S&P 500 index at the price of 1000 points that matures on June 30 of the same year and on the maturity date the S&P 500 Index is at 900, you have a ________ of $________.
A)loss; 25000
B)loss; 100
C)profit; 25000
D)profit; 100

Question

Quizplus · Accepted Answer

When you sell a futures contract, you profit if the index decreases. The index dropped from 1000 to 900, a difference of 100 points. Each point is worth $250 (the standard multiplier for S&P 500 futures), so the profit is 100 points x $250 = $25,000.

If You Sell in April a Stock Index Future Contract