Futures Profit and Loss

Futures profit and loss is the money gained or lost on a position in a futures contract. It depends on three things: how far the futures price has moved, the contract multiplier that converts one point of price into money, and the number of contracts held. For a long position:

Here $P_{\text{entry}}$ and $P_{\text{exit}}$ are the entry and exit prices, $M$ is the multiplier and $N$ the number of contracts. For a short position the sign is reversed. A trader who buys two index futures contracts with a $50 multiplier at 5,000 and sells at 5,020 gains 20 × 50 × 2 = $2,000, before fees.

The result is not paid only at the end. Positions are revalued daily through mark-to-market, and each day's gain or loss moves between accounts as variation margin. Because the margin posted is a small fraction of contract value, the leverage is high and losses can exceed the initial deposit.