bearishTrader (version 1.0.2)

zShortingCommodityFuture: Calculates Profit and Loss at expiration for Shorting a Commodity Future (per unit of the underlying commodity) and draws its graph in the Plots tab.

Description

On initiation, this is a net credit Strategy and results in net cash inflow in the form of receiving the price of Future contract (per unit of the underlying). At the time of offset the trader or investor has to buy the underlying commodity of future contract at the price on the day of offset. If the bearish outlook of the trader holds good and the price of the commodity (underlying) falls then the trader makes the profit as shown in the graph (TD Ameritrade, 2019).

Usage

zShortingCommodityFuture(
  STF,
  F0,
  C,
  hl = 0.985,
  hu = 1.005,
  xlab = "Commodity Price ($) at Offset",
  ylab = " Profit / Loss [PnL] at Offset ($)",
  main = "Shorting a Commodity Future [ PnL]"
)

Value

Returns a graph of the strategy.

Arguments

STF

Commodity price at time T.

F0

Commodity Initial Price .

C

Cost involved in establishing Future Contract.

hl

lower bound value for setting lower-limit of x-axis displaying spot price.

hu

upper bound value for setting upper-limit of x-axis displaying spot price.

xlab

X-axis label.

ylab

Y-axis label.

main

Title of the Graph.

Author

MaheshP Kumar,

Details

According to the information provided by TD Ameritrade (2019), this method is developed, and the given examples are created to compute Profit and Loss at expiration for Shorting a Commodity Future (per unit of the underlying commodity) and draws its graph in the Plots tab.

References

TD Ameritrade. (2019, July 26). Micro E-Mini Futures Contracts. YouTube.https://youtu.be/SShGjJepCdA
Hull, J. C. (2022). Options, Futures, and Other Derivatives (11th ed.). Pearson Education (US). https://bookshelf.vitalsource.com/books/9780136940043

Examples

zShortingCommodityFuture(430,430,0)
zShortingCommodityFuture(2900,2910,0,hl=0.9995,hu=1.005)