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2 August, 15:09

You sell one December futures contracts when the futures price is $1,010 per unit. Each contract is on 100 units and the initial margin per contract that you provide is $2,000. The maintenance margin per contract is $1,500. During the next day the futures price rises to $1,012 per unit. What is the balance of your margin account at the end of the day

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  1. 2 August, 16:50
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    balance in the margin account therefore goes down from $2,000 to $1,800

    Explanation:

    given data

    contract = 100 units

    futures price = $1,010 per unit

    initial margin = $2000

    maintenance margin = $1500

    futures price rises = $1,012 per unit

    solution

    we get here by short sold the futures contract so profit when price goes up is

    loss = $1,012 - $1,010 = 2 per unit

    short position loss is = 2 * 100 = 200

    Margin account balance at the end of the day = Initial margin - loss due to increase ... 1

    Margin account balance = $2000 - $200 = $1800

    so balance in the margin account therefore goes down from $2,000 to $1,800
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