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hi john, i didnt get the concept that suppose we are 8 th ovtober, and we buy for eg March futures. How will the profit or loss be calculated for only 3 months whereby it is 6 months (Oct- March) , also when we calcualte the contracts, why do we divide by 3 months futures as it is 6 months. as in how does the contract period be 3 months why is it called the 3 month futures?
The profit or loss is always calculated for three months – that is what is meant by 3 month futures.
If the length of the loan is different than 3 months then we need to deal in more or fewer futures in order to make them equal.
I do explain all of this in my free lectures, together with examples.
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