ZuoTi.Pro
Question

Today is June. Suppose you buy a futures contract for 42,000 gallons of RBOB gasoline delivered...

Today is June. Suppose you buy a futures contract for 42,000 gallons of RBOB gasoline delivered in December. The contract settles at $1.50 per gallon today. You decide to exit in August, when the contract settles at $1.45 per gallon. Calculate your payoff from holding the position between June and August

-2,100

60,900

2,100

-63,000
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Since I had gone long on the contract and it has gone down in value, I would be having a loss. The value of the loss will be = (1.5 - 1.45) x 42000 = 2100 (Loss)

Hence, option A (-2100) is correct.

0 0
Add a comment
Know the answer?
Add Answer to:
Today is June. Suppose you buy a futures contract for 42,000 gallons of RBOB gasoline delivered...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • You are short 21 gasoline futures contracts, established at an initial settle price of $2.295 per...

    You are short 21 gasoline futures contracts, established at an initial settle price of $2.295 per gallon, where each contract represents 42,000 gallons. Your initial margin to establish the position is $10,375 per contract, and the maintenance margin is $9,475 per contract. Over the subsequent four trading days, gasoline settles at $2.281, $2.309, $2.328, and $2.356, respectively. Compute the balance in your margin account at the end of each of the four trading days, and compute your total profit or...

  • Suppose the initial margin on heating oil futures is $8,500, the maintenance margin is $7,000 per...

    Suppose the initial margin on heating oil futures is $8,500, the maintenance margin is $7,000 per contract, and you establish a long position of 16 contracts today, where each contract represents 42,000 gallons. Tomorrow, the contract settles down $0.08 from the previous day's price. What is the maximum price decline on the contract that you can sustain without getting a margin call? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer...

  • You are short 15 gasoline futures contracts, established at an initial settle price of $2.085 per...

    You are short 15 gasoline futures contracts, established at an initial settle price of $2.085 per gallon, where each contract represents 42,000 gallons. Your initial margin to establish the position is $7,425 per contract and the maintenance margin is $6,500 per contract. Over the subsequent four trading days, gasoline settles at $2.071, $2.099, $2.118, and $2.146, respectively Compute the balance in your margin account at the end of each of the four trading days, and compute your total profit or...

  • You are short 15 gasoline futures contracts, established at an initial settle price of $2.66 per...

    You are short 15 gasoline futures contracts, established at an initial settle price of $2.66 per gallon, where each contract represents 42,000 gallons. Over the subsequent four trading days, gasoline settles at $2.63, $2.68, $2.71, and $2.76, respectively.    Calculate the profit or loss for each trading day. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)        Profit/Loss   Day 1 $      Day 2 $      Day 3 $      Day 4 $       Compute your...

  • Futures contract specifications for random length lumber and heating oil are shown below. Use the table...

    Futures contract specifications for random length lumber and heating oil are shown below. Use the table of futures market to answer the question. OPEN HIGH LOW SETTLE Lumber – 110,000 board feet; Dollars per 1,000 board feet Jan 2019 385.50 386.70 378.60 381.50 Mar 392.20 394.40 385.60 388.00 May 388.00 388.00 379.10 381.80 July 371.30 371.30 369.00 369.00 Heating Oil – 42,000 gallons; Dollars and Cents per gallon Jan 2019 3.0799 3.0830 3.0425 3.0506 Mar 3.0360 3.0360 2.9946 3.0041 Apr...

  • Look at the futures listings for corn in Figure 2.11. a. Suppose you buy one contract...

    Look at the futures listings for corn in Figure 2.11. a. Suppose you buy one contract for May 2015 delivery at the closing price. If the contract closes in May at a price of $3.68 per bushel, what will be your profit or loss? (Each contract calls for delivery of 5,000 bushels.) (Round your answer to 2 decimal places.)      (Click to select)   Profit   Loss  of $ b. How many May 2015 maturity contracts are outstanding? Number of outstanding contracts                 FIGURE 2.11 Corn...

  • QUESTION 13 A futures contract on copper traded at the Chicago Mercantile Exchange has a denomination...

    QUESTION 13 A futures contract on copper traded at the Chicago Mercantile Exchange has a denomination of 25,000 pounds. Today you enter into a long futures position of 10 contracts on copper at $3.33 per pound, maturing in 6 months. If copper is trading at $3.24 at maturity, what is your net profit from this position? QUESTION 14 You expect that the stock of GoPro, currently trading at $70 per share, will be volatile in the next three months, and...

  • Suppose you purchase the May 2017 call option on corn futures with a strike price of...

    Suppose you purchase the May 2017 call option on corn futures with a strike price of $3.85. Assume you purchased the option at the last price if the day. Use Table 23.2 a. How much does your option cost per bushel of corn? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.) b. What is the total cost? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c....

  • Suppose you purchase a March 2017 oats futures contract on this day at the last price...

    Suppose you purchase a March 2017 oats futures contract on this day at the last price of the day. Use Table 23.1 What will your profit or loss be if oats prices turn out to be $2.4713 per bushel at expiration? (Do not round intermediate calculations. Enter your answer as a positive value and round your answer to 2 decimal places, e.g., 32.16.) Loss TABLE 23.1 Sample Wall Street Journal Futures Price Quotations Chg Open interest -0.0125 -0.0130 6 72...

  • Suppose you purchase a July 2011 soybean oil futures contract on March 29, 2011, at the...

    Suppose you purchase a July 2011 soybean oil futures contract on March 29, 2011, at the last price of the day. Use Table 23.1    What will your profit or loss be if soybean oil prices turn out to be $0.4652 per pound at expiration Suppose you sell eight May 2011 silver futures contracts on March 29, 2011, at the last price of the day. Use Table 23.1    What will your profit or loss be if silver prices turn...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT