Hello. I need help with this homework problem. It\'s Finance related. Thanks! Yo
ID: 2725354 • Letter: H
Question
Hello. I need help with this homework problem. It's Finance related. Thanks!
You are setting up a spread trade based on the idea that you are bullish on crude products relative to refined products. Therefore you are long 100 WTI contracts and also short 100 RBOB contracts. The closing price yesterday for WTI was $43.00 per barrel and the closing price today is $43.50. The closing price yesterday for RBOB was $1.45 per gallon and the closing price today is $1.50. What is your new mark to market P&L on this trade? Were you successful in setting up this trade? (5 points)
Explanation / Answer
WTI 100 contracts Long(buy) RBOB 100 contracts Short(Sell) WTI closing price 43 today closing price 43.5 profit per contract 0.5 total profit 50 (.5*100) RBOB clos price 1.45 today closing price 1.5 Loss per contract 0.05 total loss 5 Net mark to market profit 45 Yes it was successful as it’s a overall profit
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