You sold a futures contract on oats at a futures price of 233.75 and at the time of expiration the price was 261.25.What was your profit or loss?
A) $1375.00
B) -$1375.00
C) -$27.50
D) $27.50
E) $1325.00

Question

Quizplus · Accepted Answer

To calculate profit or loss on a short futures contract, we need to subtract the futures price at expiration from the initial futures price and then multiply the result by the contract size. 
Profit/Loss = (Initial futures price - Futures price at expiration) x Contract size

Profit/Loss = (233.75 - 261.25) x 5000 (the contract size for oats)
Profit/Loss = -27.50 x 5000 
Profit/Loss = -137,500

Since the result is negative, it means that there was a loss of $1375.00 on the futures contract. Therefore, the correct choice is B.

You Sold a Futures Contract on Oats at a Futures