Computation of contract investment realization

Reference no: EM139638

Computation of Contract Investment realization and definition of the term hedging.

a) You purchase one IBM July 120 call contract for a premium of $5. You hold the option until the expiration date when IBM stock sells for $123 per share. You will realize a ______ on the investment.

b) You are currently long in a futures contract. You then instruct a broker to enter the short side of a futures contract to close your position. This is called __________.

Reference no: EM139638

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