Question

3. Laura Cervantes is a currency speculator and she sells eight June futures contracts for 500,000 pesos (each contract) at the closing (settlement) price quoted here: Mexican Peso (CME) - MXN 500,000, S per MXN Settle Change Maturity March June Sept Open 0.10953 0.1079 0.10615 High 0.10988 0.10795 0.10615 0.1093 0.10778 0.1061 0.10958 0.10773 0.10573 Lifetime High 0.11 0.108 0.10615 Lifetime Low 0.0977 0.0973 0.0993 Open Interest 34,481.00 3,405.00 1,481.00 a. What is the value of her position at maturity if the ending spot rate is $0.12002/Ps? b. What is the value of her position at maturity if the ending spot rate is $0.09802/Ps?

Answer 1

Sell 8 june Future is at settlement price that is =	0.10773	per peso
ending spot rate=	0.12002	per peso
Contract size =	500000	pesos
No. of future contracts =	8
formula for dollar profit =	(selling price - Buying price )*Contact size*No of futures
(0.10773-0.12002)*500000*8
-49160
So value of position is	-$49,160.00

Sell 8 june Future is at settlement price that is =	0.10773	per peso
ending spot rate=	0.09802	per peso
Contract size =	500000	pesos
No. of future contracts =	8
formula for dollar profit =	(selling price - Buying price )*Contact size*No of futures
(0.10773-0.09802)*500000*8
38840
So value of position is	$38,840.00