InvestorQ : i have short position in 2 months future contract 0f 100 shares of reliance @750 per share.what will happen or what ll be pay off if share share goes to 720 or 730 0r 780???
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i have short position in 2 months future contract 0f 100 shares of reliance @750 per share.what will happen or what ll be pay off if share share goes to 720 or 730 0r 780???

Answer
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sara Kunju answered.
11 months ago


I am not sure which Reliance you are talking about because RIL currently quotes at Rs.1420 and not at Rs.700. Also, futures are traded in lots and the minimum lot size of RIL is 500 shares so you cannot buy and sell futures in 100 shares but it has to be minimum lot sizes of 500 shares. If you sell 2 lots it is equivalent to 100 shares and so on. But let me come back to your question assuming that it is you are asking a hypothetical question.

If you have a short position in RIL futures that means you expect the stock price to come down and you sold the future short so that you can buy it back at a lower price. For you the positive cash flows will start below Rs.750 and there will be losses above Rs.750. So at Rs.720, you will have a profit of Rs.30 per share and at Rs.780 per share you will have a loss of Rs.30 per share. It is as simple as that because in futures positions your profits and losses can be unlimited.