On April 1,you bought one S&P 500 index futures contract at a futures price of 950.If on June 15^th the futures price were 1012,what would be your profit (loss)if you closed your position (without considering transactions costs)?

Question

Quizplus · Accepted Answer

The formula for calculating profit or loss on a futures contract is:
Profit (or loss) = (Futures price at time of closing - Futures price at time of buying) x Contract size x Number of contracts

Given the information in the question:

- Futures price at time of buying (April 1): 950
- Futures price at time of closing (June 15): 1012
- Contract size: 500 (i.e. the contract is for $500 times the S&P 500 index)
- Number of contracts: 1

Therefore, profit (or loss) = (1012 - 950) x 500 x 1 = $31,000

Since we bought the contract at a lower price and sold it at a higher price, our profit is positive. The correct answer is C) $15,550 profit.

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