Draw the trader payoff diagram

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Reference no: EM131566423

Currently, average spot price for cotton is 76 cents per pound. A trader wants to trade three cotton futures contract (each futures contract is for 50,000 pounds of cotton) with the futures price of 75 cents per pound. Considering the spot price for cotton at the end of the contract will be between 60 cents per pound and 90 cents per pound, draw the trader’s payoff diagram if trader has a long position and draw the trader’s payoff diagram if trader has a short position.

Reference no: EM131566423

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