Reference no: EM132005736

Explain how each trader would set up a strategy to carry out their intended purpose. Be as specific as possible in each case, by providing details about the strategy: the position (whether long or short), the size of the exposure (notional amount), the number of contracts involved (if more than one), the expiration date of the contracts, etc. In each case, explain whether the trader will realize a profit or a loss if the underlying asset/variable increases by 10%. A hedge fund manager is speculating that the S&P 500 index will drop considerably in value before the 2018 midterm elections that will culminate with the November 6, 2018 general election. The hedge fund manager has $580,000 of capital to put in a margin account to trade futures contracts on the CME. 1. What position should the hedge fund manager take (long or short)? What futures contract should be used? Which month should be chosen for the futures contracts? 2. How many futures contracts can be entered into, if the hedge fund manager uses all of the funds available in the margin account? What notional amount is associated with this? 3. Will the hedge fund manager realize a profit or a loss if the S&P 500 index increases by 10% over the timeframe?