Suppose that on February 10, 2021, a trader takes a short position in one CME May...

 

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Suppose that on February 10, 2021, a trader takes a short position in one CME May 2022 copper futures contract when the futures price is $3.5925 per pound. At the end of trading on December 31, 2021, the futures price is $3.5132 per pound. The trader closes out the position on April 26, 2022 when the futures price is $3.4245 per pound. What is the (final) profit on the contract when the position is closed out? If the trader were working for a company that was using the contract for a hedge, in which year or years would taxes be due? a. b. C. d. e. If the trader were working for a company that was using the contract for a hedge, how much tax would be paid in 2022 if the corporate tax rate is 21%? What would be the answer to part b) above if, instead of hedging, a speculative trade had been placed? If the trader were working for a company that was using the contract for speculation, how much tax would be paid in 2021 if the corporate tax rate is 21%? Suppose that on February 10, 2021, a trader takes a short position in one CME May 2022 copper futures contract when the futures price is $3.5925 per pound. At the end of trading on December 31, 2021, the futures price is $3.5132 per pound. The trader closes out the position on April 26, 2022 when the futures price is $3.4245 per pound. What is the (final) profit on the contract when the position is closed out? If the trader were working for a company that was using the contract for a hedge, in which year or years would taxes be due? a. b. C. d. e. If the trader were working for a company that was using the contract for a hedge, how much tax would be paid in 2022 if the corporate tax rate is 21%? What would be the answer to part b) above if, instead of hedging, a speculative trade had been placed? If the trader were working for a company that was using the contract for speculation, how much tax would be paid in 2021 if the corporate tax rate is 21%?

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a To calculate the profit on the contract we first need to determine the initial sell price and the ... View the full answer