Chartered Accountnat CS
1585 Points
Joined February 2011
Hi siddarth
Regarding Doubt no 1
The solution is logical
The trader will enter into a futures contract @ 18.50 maturing last thursday of the 6th month
Now suppose we are in the sixth month
Now the price is reduced to 17.5 in spot
But futures maturing last the thursday of this month are selling @ 17.55
So we will enter into a reverse futures contract @ 17.55
and we will get 18.45 as net selling price.
What you are thinking is that the net selling price should be 18.5.........rite????
But dear, futures mature on last thursday of the month
it is not necessary that the trader sells goods in spot at last thursday
so he should enter into a reverse future contract
hope you got it
regards
rahul