Question

In: Finance

Suppose that A is an individual investor and OL represents other investors. All the investors who...

Suppose that A is an individual investor and OL represents other investors. All the investors who hold short positions are denoted by SH.

Currently, A holds 2,000 contracts long and OL holds 4,200 long contracts.

Starting with the current holdings, determine the holdings of A, OL, SH, as well as the volume and the Open Interest after each of the following transactions and the end result:

Day 0. Current holdings.

Day 1. A shorts 500 contracts and OL longs 500 contracts

Day 2. A longs 700 contracts and OL shorts 700 contracts

Day 3. A longs 200 contracts and SH shorts 200 contracts

Day 4. A shorts 800 contracts and SH longs 800 contracts

Suppose that A is an individual investor and OL represents other investors. All the investors who hold short positions are denoted by SH.

Currently, A holds 2,000 contracts long and OL holds 4,200 long contracts.

Starting with the current holdings, determine the holdings of A, OL, SH, as well as the volume and the Open Interest after each of the following transactions and the end result:

Day 0. Current holdings.

Day 1. A shorts 500 contracts and OL longs 500 contracts

Day 2. A longs 700 contracts and OL shorts 700 contracts

Day 3. A longs 200 contracts and SH shorts 200 contracts

Day 4. A shorts 800 contracts and SH longs 800 contracts

Solutions

Expert Solution

Investor Day 0 Day 1 Day 2 Day 3 Day 4
Buy Sell Contracts Held Buy Sell Contracts Held Buy Sell Contracts Held Buy Sell Contracts Held Buy Sell Contracts Held
A 2000L 2000L 500S 1500 700 2200 200 2400 800 1600
Other 4200L 4200L 500L 4700 700 4000 200 3800 800 4600
Contracts Outstanding(Open Interest) 6200 6200 6200 6200 6200
Volume 6200 6700 7400 7600 8400

L = Long , S = Short, OI = Other Investor

Day 0

A long 2000 contracts and OI long 4200 contracts, therefore, Volume is 6200 contracts and Open Interest is 6200

A holding - 2000 contracts long

OI holding - 4200 contracts long

Day1

A shorts 500 contracts and OI Long 500 contracts, therefore volume increase by 500 so, the volume is 6700 contracts and Open Interest does not change as it does not alter the open position, therefore, Open Interest = 6200

A holding - 1500 contracts long

OI holding - 4700 contracts long

Day2

A longs 700 contracts and OI shorts 700 contracts, therefore volume increase by 700 so, the volume is 7400 contracts and Open Interest does not change as it does not alter the open position, therefore, Open Interest = 6200

A holding - 2200 contracts long

OI holding - 4000 contracts long

Day3

A longs 200 contracts and OI shorts 200 contracts, therefore volume increase by 200 so, the volume is 7400 contracts and Open Interest does not change as it does not alter the open position, therefore, Open Interest = 6200

A holding - 2400 contracts long

OI holding - 3800 contracts long

Day4

A shorts 800 contracts and OI Long 800 contracts, therefore volume increase by 800 so, the volume is 8200 contracts and Open Interest does not change as it does not alter the open position, therefore, Open Interest = 6200

A holding - 1600 contracts long

OI holding - 4600 contracts long

jeff jeffy answered 4 months ago
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