If you sell in April a stock index future contract on the S&P 500 index at the price of 800 points that matures on June 30 of the same year and on the maturity date the S&P 500 Index is at 795, you have a ________ of $________.
A)loss; 1250
B)loss; 5
C)profit; 1250
D)profit; 5

Question

Quizplus · Accepted Answer

When you sell a futures contract, you profit if the index decreases. The index decreased from 800 to 795, a difference of 5 points. Each point is worth $250, so the profit is 5 points x $250 = $1250.

If You Sell in April a Stock Index Future Contract