You have one short position in foreign exchange futures contracts on £s.The contract size is £100,000.During the day the futures exchange rate (measured in $/£)increased by $0.01/£ while the spot exchange rate decreased by 0.01.As a result,you:
A) have won $1,000.
B) have lost $1,000.
C) have neither won nor lost any money.
D) are unable to answer based on the information provided.

Question

Quizplus · Accepted Answer

Since the spot rate is decreased by $0.01/£, the marked-to-market model will reduce the account by:£100,000 × -$0.01/£ = -$1,000.Therefore, we have lost $1,000 in the spot market fluctuations.

You Have One Short Position in Foreign Exchange Futures Contracts