A trader purchases 4 futures contracts with a total value of $100 when the price of the contracts (based on the SPI 200 share price index)is 3026.When these contracts expire,the index itself is at 2950 points and the price of the SPI 200 contract units is 2975.The trader has:
A) made a gain of $5100
B) made a loss of $5100
C) made a loss of $2550
D) made a gain of $2550

Question

Quizplus · Accepted Answer

The trader made a loss because the price of the contracts decreased from 3026 to 2975. The loss per contract is (3026 - 2975) = 51 points. Since each point is worth $25, the loss per contract is 51 * $25 = $1275. For 4 contracts, the total loss is 4 * $1275 = $5100.

A Trader Purchases 4 Futures Contracts with a Total Value