On September 1st an asset has a spot price of $50 and its December futures price...
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On September 1st an asset has a spot price of $50 and its December futures price is $49.50. On November 1st the spot price is $47, and the December futures price is $47.50. You enter into long futures contracts on September 1st to hedge against the asset on November 1st. You close out the long futures position on November 1st. What is the effective price that you paid with the long hedging? On September 1st an asset has a spot price of $50 and its December futures price is $49.50. On November 1st the spot price is $47, and the December futures price is $47.50. You enter into long futures contracts on September 1st to hedge against the asset on November 1st. You close out the long futures position on November 1st. What is the effective price that you paid with the long hedging?
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To calculate the effective price that you paid with the long hedging we need to consider the gains o... View the full answer
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