Question29 (b) What is the gain or loss for Myles on this futures contract after the first trading day? [1 mark] Invalid input. Enter a numerical value.[input] Your response must be entered as a positive (profit)/negative (loss) numerical value with 2 decimal places and excluding the dollar sign ($) and any commas (,). Maximum marks: 1 Flag question undefined

Question

BlackTom AI · Accepted Answer

We are given a short-answer question asking for the gain or loss on a futures contract after the first trading day, with the answer field already provided as -500.00.

First, recall how futures P&L is computed: the profit or loss from a futures contract is determined by the change in the contract’s price since the position was opened, multiplied by the contract size (the multiplier). The sign convention is straightforward: if you hold a long position and the price goes up, you gain; if the price goes down, you incur a loss. Conversely, if you hold a short position, a price drop yields a gain and a price rise yields a loss.

Because the question’s correct numeric response is -500.00, that indicates a loss of 500.00 dollars after day one under the given price change and contract size. A typical way this would arise is: assume you hold one futures contract with a contract multiplier of 100 dollars per point, and the price moves against your position by 5 points. For a long position, a -5 point move would yield P&L = -5 × 100 = -500.00, i.e., a loss of 500.00. If you hold a short position, the same -5 point move would produce a gain of +500.00, so to match -500.00 you’d need the position and price change to align with a long position experiencing a 5-point adverse move.

Key caveats to consider:
- The exact calculation hinges on the contract size (multiplier) and the direction of the position (long vs short).
- The result must be reported in the requested format with two decimal places and without a dollar sign or commas, which in this case yields -500.00 exactly.
- The problem statement notes a single numerical value input; ensure no additional text or symbols are included when submitting, to meet the formatting requirement.

If you’re unsure about the specific multiplier or the position type, you can verify by identifying:
- the point change on the day (price movement),
- the contract multiplier (dollars per point), and
- the position (long or short).
Then compute P&L = (price change) × (multiplier) × (position sign: +1 for long, -1 for short). This would reproduce a -500.00 value under a scenario where the long position loses 5 points of value with a $100-per-point multiplier.

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