Closing spot and June future contract prices for commodity A1 for 4-consective d

Question

Closing spot and June future contract prices for commodity A1 for 4-consective days

Date

1

2

3

4

Closing Spot Price

0.6579

0.6527

0.6588

0.6580

June Future contract price

0.6750

0.6612

0.6937

0.6823

Suppose: You bought 2 A1 future contracts of closing price on Feb 1. Each A1 futures contract is for 125000 oz. of A1. Suppose initial and margin for each A1 future contracts are $1500 and $1000 respectively. Assume that you do no withdraw from you margin account during this period, but you meet your margin calls if you got any. For each of the following days:

a. Determine the profit on loss posted to the account on:

2nd Feb

3rd Feb

4th Feb

b. Determine if any margin calls were received and the amount of the margin call.

Date

1

2

3

4

Closing Spot Price

0.6579

0.6527

0.6588

0.6580

June Future contract price

0.6750

0.6612

0.6937

0.6823

Explanation / Answer

a.

Working:

Thus, profit or loss posted to the account on: 2nd feb $        5,575 3rd feb $        1,525 4 th feb $           200

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