Chapter 02 · Section 2.1
IMM DM Futures-Q1
It is now May. Our investor is still short 1 IMM June DM Futures contract. He decides that he wants to close his position. Our investor can close his position:
a) by selling 125,000 Deutsche Marks.
b) by buying 125,000 Deutsche Marks.
c) by selling 1 IMM June DM Futures contract.
d) by buying 1 IMM June DM Futures contract.
e) by selling 1 IMM May DM Futures contract.
f) by buying 1 IMM May DM Futures contract.
The investor simply wants to liquidate his position so as to have no exposure to price fluctuations and no obligation to deliver DM 125,000.
Remember we are discussing a futures contract. In futures, delivery is only possible during a short period before the maturity of the contract.