Question

4. You sold a futures contract for GBP10,000 at $1.50/GBP. Suppose that the futures price at settlement was $1.30. How much would be your payoff

Answer 1

Answer: $2,000

Step-by-step explanation:

The Futures were sold at $1.50/GBP yet the settlement is $1.30/GBP. That means the premium is;

= 1.50 - 1.30

= $0.2/GBP

Payoff would be;

= 10,000 * 0.2

= $2,000