What is your profit and loss on the futures contracts

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Reference no: EM131886297

You own a plastics company that uses crude oil. You are afraid of prices rising. Oil is currently $50 per barrel and a contract is 1000 barrels. Margin is 10%. You need 10,000 barrels in 3-months and the futures price is $52. Do you go long or short the futures? How many contracts do you buy or sell? How much cash must you put up? What is your net price for oil if prices in 3 months rise to $55? What if prices fall to $45? What is your profit/loss on the futures contracts?

Reference no: EM131886297

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