Problem-01a: Current crude oil price is $52.00 per barrel. You sell (short position) 5, five, crude oil futures contracts at futures price of $54.00 per barrel with maturity of one month. (Size of the contract is 5) Note that the size of one futures contract is 1,000 barrels.

1. What is your profit if the crude oil price is $57.00 at maturity and assume cash settlement for this problem?

ii. What is your profit if the crude oil price is $49.00 at maturity and assume cash settlement for this problem?

Problem-01b: Using information in problem-01a:

1. Graph your profit/loss function for likely crude oil prices between $20 and $80 in increments of $5.00 at maturity. Label both axes properly!
2. Show the profit and loss for the likely prices in problem-01a, only two data points. Note that you already calculated them in 01a. Just add your findings to the graph as two data points.

Problem-02a: Current S&P Index is at 2,645. Suppose you take a long (buy) position on 6, six, S&P 500 futures contracts when the futures price of the index is 2700.00. Assume that maturity of the futures contracts is one-month. (Size of the contract is 6) Note that the size of one futures contract is equal to ($250)x(Index Value).

1. What is your profit/loss if S&P 500 index is 2630.00 at maturity?

ii. What is your profit/loss if S&P 500 index is 2780.00 at maturity?

Problem-02b: Using information in problem 02a:

i. Graph your profit/loss function for likely S&P 500 index numbers between 2500.00 and 2900.00 in increments of 20 at maturity. Label both axes properly!

ii. Show the profit and loss for the likely prices in problem-02a. Note that you already calculated them in 02a. Just add your findings to the graph as two data points.