Futures contract expiring on 28 October in U.S. Dollar at NSE is selling for ₹68.68. Your Banker has offered a forward contract for delivery on 28 October at ₹68.90/Dollar. How can you take advantage of disparity in the

In the Futures market US Dollar is cheap as compared to the forward rate. Therefore, one can go long in the futures market and sell Dollars to bank in the forward market locking a profit of ₹0.22 per US Dollar. Today ₹68 per US $ Buy $ future at NSE ₹68.68 Sell $ forward to bank ₹68.90 Net profit or loss per $ ₹0.22 At maturity spot exchange rate ₹68 per $ ₹69 per $ Profit or loss on future (0.68) Profit or loss on future 0.32 Profit or loss on forward 0.90 Profit or loss on forward (0.10) Net gain or loss 0.22 Net gain or loss 0.22