The spot price for gas today (March 19, 2020) is $1.661 MMBtu. The futures price today for gas to be delivered in June 2021 is $2.245. Your company is a gas purchaser/user and is interested in the hedging process.

1. You are a speculator and believe the price of gas will increase. You have a chance to buy a June 2021 futures contract at $2.245. Would you go short or go long on a June 2021 futures contract for 10,000 MMBtus?

2. It is now December 31, 2020 On this day, the spot price for natural gas is $2.450 per MMBtu and the June 2021 futures price is $2.310 per MMBtu. What is the amount of gain or loss related to your contract as of December 31, 2020?

3. As a speculator the last thing you want to do is either take delivery of or actually sell natural gas. Explain how you would get out of the contract you purchased in part e. prior to the June 2021 delivery date.