You sold one August futures contract on corn. You will
A) Have to pay the corn when it is delivered in August
B) Most likely take delivery of the corn in August
C) Most likely buy an August futures contract to offset this contract
D) Receive payment for the corn now and will deliver the corn in August
E) Pay for the corn now and accept delivery in August

Question

Quizplus · Accepted Answer

Selling a futures contract means that you are obligating yourself to sell the commodity at a certain price at a future date. Therefore, in this scenario, you would most likely buy an August futures contract to offset the one you sold and close out your position before the delivery date. This strategy would allow you to realize any gains or losses on the contract without actually taking physical possession of the corn.

You Sold One August Futures Contract on Corn