Suppose you sell nine September 2016 tungsten futures contracts on this day, at the last price...
Suppose you sell nine September 2016 tungsten futures contracts on this day, at the last price of the day which is $845 per ounce. Each contract is for 100 ounces. What will your cumulative mark to market be if tungsten prices are $885 per ounce at expiration? (Do not round intermediate calculations. Enter your answer as a positive value if a profit or as a negative number if a loss. Round to the nearest whole number, i.e. dollar, e.g., 32.)
Cumulative MTM = $______
Hint: You were betting on the price going down by selling contracts. Yet the price went up. You lost and your CumMTM is negative. It is equal to the number of contracts times the quantity in each contract times the difference in prices.
Homework Answers
CUMULATIVE MTM = No of contracts sold x no of ounces in each contract x (sale price - price at closing)
CUMULATIVE MTM = 9 x 100 x (845 -885) = - 36000
Answer : - 36000 [ loss ]
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