Which of the following is true about profits from futures contracts?
A) The person with the long position gets to decide whether to exercise the futures contract and will only do so if there is a profit to be made.
B) It is possible for both the holder of the long position and the holder of the short position to earn a profit.
C) The clearinghouse makes most of the profit.
D) The amount that the holder of the long position gains must equal the amount that the holder of the short position loses.
E) Holders of short positions can recognize profits by making delivery early.

Question

Quizplus · Accepted Answer

In futures contracts, the profit of the long position is exactly equal to the loss of the short position, and vice versa, because they are zero-sum games.

Which of the Following Is True About Profits from Futures