1. On January 5 a speculator expected a major stock price increase, but wished to control his risk exposure. He expected the Dow Jones Industrial Average (DJIA) index to increase faster than the S&P...

1. On January 5 a speculator expected a major stock price increase, but wished to control his risk exposure. He expected the Dow Jones Industrial Average (DJIA) index to increase faster than the S&P 500 index. On January 5, the June DJIA index futures contract closed at 12,334 and the June S&P 500 index futures contract at 1,263. The speculator bought 15 DJIA futures contracts and sold 5 S&P

500 futures contracts, with June being the expiry date for both contracts. He closed his position on May 9 with DJIA at 12,978 and S&P 500 at 1,325. Describe his speculative strategy and compute the gains and losses from each position and the net gain or loss.