Questions / Quant trading, Markets & quotes
A tick is a cash exposure
A hypothetical futures contract moves in 0.25-point ticks and pays $40 per point. Your desk is short 7 contracts. What is the P&L if the price rises by one tick?
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Answer: -70 USD
- One tick is 0.25 × $40 = $10 per contract. Seven short contracts lose 7 × $10 = $70.
Interview shortcut. Tick value = 0.25 × $40 = $10; short 7 loses 7 ticks’ worth.
In the app this has a follow-up where one thing about the setup changes. Try the follow-up.