Question

You bought 100 Swiss franc futures contract (size is SFr 125,000) ata price of $0.9535. If the spot rate for the Swiss franc $0.98450, what is your gain or loss on this trade? at the date of settlement is SFr 1

(A) $3,875
(B) $387,500
(C)-$3,875
(D)-$387,500

Answer 1

Option B, $387,500, is the right answer.

Step-by-step explanation:

Total number of Swiss franc ( contract) = 100

Size of contract = 125000

Purchase price = $0.9535

Settlement price = $0.98450

Below is the calculation:

Gain on the trade = ( Price at the date of settlement - purchase price ) x number of contracts x size of the contract

Gain on the trade = ( $ 0.98450 - $ 0.9535 ) x 100 x 125,000

Gain on the trade = $ 387,500