How does one make Profit in Futures Market when buying or selling contracts ?
Suppose its March and the strike price for XYZ shares is Rs 50. The July futures are available for Rs 45 and I buy 10 contracts of 100 shares each. I pay 45*100*10=Rs 45000.
Now in May, the prices of July futures rise to Rs 55. So I decide to close out my position and enter into a sell contract of Rs 55. Will my profit be Rs (55-45) * 100*10 = Rs 10000.
Is this correct interpretation ? Does the same work in selling a contract, except that you make profit when prices fall ?
Thanks
GTY
Suppose its March and the strike price for XYZ shares is Rs 50. The July futures are available for Rs 45 and I buy 10 contracts of 100 shares each. I pay 45*100*10=Rs 45000.
Now in May, the prices of July futures rise to Rs 55. So I decide to close out my position and enter into a sell contract of Rs 55. Will my profit be Rs (55-45) * 100*10 = Rs 10000.
Is this correct interpretation ? Does the same work in selling a contract, except that you make profit when prices fall ?
Thanks
GTY
