Questions

Question 1

A fund manager buys 20 Short Sterling STIR 3-month future contracts at 94.88 and sells them the next day at 94.96.
How much profit has he made?

The tick size (or minimum price movement) is 0.01%
The price movement is 0.08 (or 8 ticks)
profit = (ticks gained * tick value * no of contracts)
profit = (ticks gained * (tick size * contract * time) * no of contracts)
profit = 8 * (0.01 * 500,000 * (3/12)) * 20
profit = 8 * 12.5 * 20
profit = £2,000.00

Question 2

A fund manager buys a EuroDollar 3-month future contract at 99.25
If the value changes by one basis point (0.01%) what the movement in the contract value ?

The tick size (or minimum price movement) is 0.005%
tick value = (tick size * contract * time)
tick value = (0.005% * 1,000,000 * (90/360)
tick value = $12.50