Question?

Discussion in 'Trading' started by Klemm, Dec 14, 2009.

  1. Klemm

    Klemm

    Can anyone help me pleas with this exercies please

    13) The client has a short position in Nickel at the Cash price (price of the last trading day). The last 3 months Nickel curve is backward sloping (that is the Cash future is more expensive than the 3 months contract). The difference between the cash and 3 months prices is 3 000 USD. The client rolls over his cash date position to the 3 months date. As a result of this transaction the client has which of the following:

    a) Profit of 3 000 USD per tone of Nickel
    b) Loss of 3 000 USD per tone of Nickel
    c) The money value of the client position remains the same because it is just the rollover of the existing position
    d) The client gets profit of 3 000 USD today but is obliged to pay it back at the maturity date

    Explain Your choice and show the calculations: ………………………….


    I'm learning , and thinking for an hour for about the answer. I can't exactly understand what the roll over means


    THANK YOU! :)