Question: on (with basis risk): 1) Opening basis and closing basis Date word Bri Cash Futures 1-Oct Cash Price $2.30 May Futures $2.75 Cost of

on (with basis risk): 1) Opening basis and closing basis Date word

on (with basis risk): 1) Opening basis and closing basis Date word Bri Cash Futures 1-Oct Cash Price $2.30 May Futures $2.75 Cost of holding from Oct 1 to May 1 = $0.21 Expected Closing Basis = -$0.15 (A) What is the expected profit margin? = -0.15-12.30 -2.75)-0.21=0.09 1-Oct 1-May Sell Cash @ $2.40 Sell May Futures @ $2.75 Buy May Futures @ $2.50 -45 (B) What is the opening basis? 2.30 -2.75 (C) What is the actual closing basis? (D) What is the gain or loss on futures market result? = (D) What is the gain or loss on cash market result? = (E) What is the realized price (or net selling price)? = (F) What is the overall profit? =

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