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Marcus is a wheat trader who believes that the price of wheat will increase in the short-term. He takes a long position (buys) ten wheat
Marcus is a wheat trader who believes that the price of wheat will increase in the short-term. He takes a long position (buys) ten wheat contracts to take advantages of future increase in prices. Details of the wheat contract include:
- Contract size: 5,000 bushels
- Current (spot) price: $0.70 per bushel
- Futures price: $0.75 per bushel
Calculate his profit/loss from this transaction if the price of wheat is $0.82 per bushel at expiration.
$3,000 | ||
$2,500 | ||
$4,000 | ||
$3,500 |
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