TURNING BASIS INTO MONEY
Your task in these scenarios is to:
1) Determine the proper futures order to be executed based on the activity given, and
2) Determine what the ending open futures position would be on the futures account statement after taking the beginning position and futures transaction into account.
Each question is a different scenario and numbers do not carry forward to the next question.
• Your beginning open futures position is SHORT 2 contracts of DEC corn.
• You purchase 5,000 bushels of cash corn from a producer at -40 DEC.
What futures order do you execute upon the purchase of the cash grain to turn this into a basis transaction?
What is your ending Open Futures Position after the futures transaction is completed?
You may find it helpful to use the attached worksheet to walk through the steps and determine the answer to