Question

Jack Hemmings bought a 3-month British pound futures contract for $1.4400/£ only to see the dollar appreciate to a value of $1.4250 at which time he sold the pound futures. If each pound futures contract is for an amount of £62,500, how much money did Jack gain or lose from his speculation with pound futures?

Answer 1

$937.50 Gain

Step-by-step explanation:

The computation of the gain or loss is shown below:

= (Future contract per pound - appreciated value per pound) × amount of each pounds future contract

= ($1.4400 - $1.4250) × £62,500

= $0.0150 × £62,500

= $937.50 Gain

We simply deduct the appreciated value per pound from the future contract per pound and multiply it with the future contract amount so that the accurate value can come.