On January 1,you bought one April S&P 500 index futures contract at a futures price of 420.If on February 1 the April futures price were 430,what would be your profit (loss)if you closed your position (without considering transactions costs)?

Question

Quizplus · Accepted Answer

The profit (loss) on a long futures contract is calculated as the difference between the selling price and the buying price, multiplied by the contract size (in this case, the contract size for the S&P 500 index futures contract is $250 times the index value).

Profit (loss) = (Selling price - Buying price) x Contract size

In this case, the buying price on January 1 was 420. If the futures price on February 1 was 430 and you closed your position at that price, your profit would be:

Profit = (430 - 420) x 250 = $2,500

Therefore, the correct answer is C, $2,500 profit.

On January 1,you Bought One April S&P 500 Index Futures