You have taken a short position in a futures contract on corn at $2.60 per bushel. Over the next 5 days the contract settled at 2.52,2.57,2.62,2.68,and 2.70. Before you can reverse your position in the futures market on the fifth day you are notified to complete delivery. What will you receive on delivery and what is the net amount you receive in total?
A) $2.60; $-0.10
B) $2.60; $0.10
C) $2.60; $2.70
D) $2.70; $-0.10
E) $2.70; $2.60

Question

Quizplus · Accepted Answer

The futures contract is settled at $2.70 per bushel, so the trader will receive $2.70 per bushel on delivery. The trader sold the contract at $2.60 per bushel, so the net amount received is $2.70 - $2.60 = $0.10 per bushel.

You Have Taken a Short Position in a Futures Contract