Question
In a futures contract, if the spot price at maturity is
lower than the agreed futures price, the party with a 'Short Position' will:Solution
- Short Position (Seller):  Has the obligation to sell  the asset at the futures price.
- At maturity, the futures price converges with the spot price.
- If Spot Price < Futures Price , the short position holder can buy the asset cheaply in the spot market  (at the lower spot price) and sell it at the higher agreed futures price  to fulfill the contract.
- Profit for Short Position = Futures Price - Spot Price  (a positive number in this scenario).
Example: Futures price = ₹100, Spot at expiry = ₹90. The short seller buys at ₹90 and sells at ₹100, making a ₹10 profit (before transaction costs).
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