You have taken a short position in a futures contract on corn at $2.60 per bushel. Over the next 5 days the contract settled at 2.52, 2.57, 2.62, 2.68, 2.70. Before you can reverse your position in the futures market on the fifth day you are notified to accept delivery. What will you receive on delivery and what is the net amount you receive in total?
A) $2.60; $2.70
B) $2.70; -$0.10
C) $2.70; $2.60
D) $2.60; $0.10
E) $2.60; -$0.10

Question

Quizplus · Accepted Answer

Since you have a short position in a futures contract at $2.60 per bushel, you agree to sell corn at this price. However, the price at delivery is $2.70, meaning you effectively sell at a loss of $0.10 per bushel.

You Have Taken a Short Position in a Futures Contract