The payoffs diagrams to both long and short positions in a forward contract are asymmetrical around the contract price.

Question

Quizplus · Accepted Answer

The payoff diagrams for both long and short positions in a forward contract are symmetrical around the contract price, but they are mirror images of each other. A profit for the long position corresponds to a loss of the same magnitude for the short position, and vice versa, depending on the difference between the forward contract price and the underlying asset's price at settlement.

The Payoffs Diagrams to Both Long and Short Positions in a Forward