Chapter 19

Commodity and financial Futures

This DB remains active till 10/30

1. What is a future contract?
2. If you expect stock prices to fall, do you buy or sell stock index futures?
3. If you anticipate crude oil price to go up, do you buy (Go long) or sell (Go short) crude oil futures?
4. Do you think there should be a relationship between spot and future price? Why?
5. Assume that last month you had bought one December 2016 crude oil contract at a price of $46.58. Assume you close (Sell) your position at the time of answering this post. Estimate your profit or loss. (Hint: go to Stocktrak and find out what is December crude oil price when you are answering this post, and use that price to estimate your profit and loss.) Or you could get the crude oil future price from Barchart.com. So find December Crude oil price (either from Stocktrak or Barchart.com) and use this price to estimate your profit or loss.

Note: December Crude Oil future price changes minute by minutes, therefore if two student post at different time, their future prices should be different. This is a warning not to use another students price.