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You are an electricity trader at PJM. Today is March 1999. You observe the following forward curve for the year 2000. Price as per MWh:
You are an electricity trader at PJM. Today is March 1999. You observe the following forward curve for the year 2000. Price as per MWh:
Mar
Jan-00 31
Feb-00 30
Mar-00 25
Apr-00 23
May-00 29
Jun-00 39
Jul-00 76
Aug-00 72
Sep-00 36
Oct-00 25
You bought 10 September contracts and sold 10 July contracts. (Dont forget about contract multiplier.) Six months later, you observe September price to be $35 and July to be $93 per MWh. Calculate your total profit / loss on the positions.
a. $132,480 profit
b. -$117,760 loss
c. 117,760 profit
d. -$132,480 loss
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