Suppose you sold three September cocoa futures contracts at a price quote of 1,696. Cocoa futures contracts are based on 10 metric tons and priced in dollars per ton. What will be your profit or loss on this contract if the price turns out to be $1,707 per metric ton at expiration?
A) $330
B) −$330
C) $110
D) −$110
E) $150

Question

Quizplus · Accepted Answer

The loss per contract is calculated as the difference between the selling price and the buying price (or the price at expiration), multiplied by the size of the contract. Here, the loss per contract is (1707 - 1696) * 10 = 110 dollars. Since there are three contracts, the total loss is 110 * 3 = 330 dollars. Therefore, the answer is −$330.

Suppose You Sold Three September Cocoa Futures Contracts at a Price