It is January. You work at a hedge fund. You expect to receive approximately $4.2 million in June that you plan to invest into a diversified range of stocks. You trade sufficient contracts to hedge as close to this amount as possible.

The broad market has been quite strong, of late, and you expect this to continue over coming months due to a strong economy and the flow of positive economic data.

The current price for the share price index futures contract, SHARE200, is 6243.

Each contract has a tic value of $25.00
 

If the SHARE200 index is 6602 in July, what is the outcome of your trade?

Answer rating: 100% (QA)

To hedge as close as possible to the expected 42 million we need to determine the number of futures ... View the full answer