Tony Begay, a currency trader for Chicago-based Saguaro Funds, uses the following futures quotes on the British pound () to speculate on the value of the pound. British PoundFutures, US$/pound (CME) Contract = 62,500 pounds Open Maturity Open High Low Settle Change High Interest March 1.4246 1.4268 1.4214 1.4228 0.0032 1.4700 25,605 June 1.4164 1.4188 1.4146 1.4162 0.0030 1.4550 809 a.If Tony buys 5 June pound futures, and the spot rate at maturity is $1.3980/, what is the value of her position? b.If Tony sells 12 March pound futures, and the spot rate at maturity is $1.4560/, what is the value of her position? c.If Tony buys 3 March pound futures, and the spot rate at maturity is $1.4560/, what is the value of her position? d.If Tony sells 12 June pound futures, and the spot rate at maturity is $1.3980/, what is the value of her position? a) b) c) d) Assumptions Values Values Values Values Pounds () per futures contract 62,500 62,500 62,500 62,500 Maturity month June March March June Number of contracts 5 12 3 12 Did she buy or sell the futures? buys sells buys sells Ending spot rate ($/) Pound futures contract, settle price ($/) Spot - Futures Value of position at maturity ($) buys: Notional x (Spot - Futures) x contracts sells: - Notional x (Spot - Futures) x contracts Interpretation Buys a futures: Tony buys at the futures price and sells at the ending spot price. She therefore profits when the futures price is less than the ending spot price. Sells a future: Tony buys at the ending spot price and sells at the futures price. She therefore profits when the futures price is greater than the ending spot price.