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Hi Mr.John
In the AFM Polytot Question, in calculating the number of contracts the examiner has divided the receipt in $ with the opening futures rate that is ($4124236/$1.5275)/62500 Pounds and that was around 43 contracts.
But my query was that in calculating the number of contracts why the receipt was translated using opening futures rate?
Can’t we translate the receipt using forward rate because in other past questions, the receipt was translated using forward or closing futures rate in calculating the no. of contractsNo – using futures is ‘gambling’ on movements in the futures price (as I explain in my free lectures) and so it is the futures price that should be used in determining the number of contracts and not the forward rate which is nothing to do with the futures price.
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