Question29 (b) What is the gain or loss for Myles on this futures contract after the first trading day? [1 mark] 0[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

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BlackTom AI · Accepted Answer

The question asks for the gain or loss on a futures contract after the first trading day and requires the response as a negative or positive number with two decimals, excluding currency symbols and commas.

First, establish the framework for futures gains and losses: in futures trading, each day’s settlement updates the value of the contract based on the change in the price from the previous day. The delta is calculated as: daily gain/loss = price_change × contract_multiplier. A positive result indicates a gain for the holder of the long position, while a negative result indicates a loss.

Next, interpret the provided answer: -500.00. This implies that, after the first trading day, the contract moved unfavorably by an amount equivalent to 500 in the contract’s monetary units. In other words, the price change and the contract’s multiplier combined to produce a $500 loss for the day.

To reason this out concretely, you would typically:
- Identify the opening price of the futures contract on day one and the settlement price at the end of day one.
- Compute the price change: Ending price − Opening price.
- Multiply that change by the contract multiplier (the number of currency units per price unit for the contract).
- The resulting figure is the daily gain or loss; if the sign is negative, it represents a loss.

If you had additional data, such as the actual opening price, ending price, and the contract size, you could plug them into the formula to reproduce the -500.00 value step by step. Since those numbers aren’t provided here, we rely on the stated answer.

Note on interpretation: reporting -500.00 as a loss means the holder of the contract would observe a decrease in equity of 500 units on day one due to the price movement against their position. If the contract had been held long and the price fell, that would explain a negative result; conversely, for a short position, a price rise would yield a negative daily P/L in the same way.

In practical exam scenarios, you would confirm by checking the price movement from day 0 to day 1 and applying the contract multiplier to obtain the exact daily gain or loss. The core concept remains: daily P/L = price_change × contract_multiplier, with the sign indicating gain or loss.

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