You are long 10 gold futures contracts, established at an initial settle price o

Question

You are long 10 gold futures contracts, established at an initial settle price of $1,500 per ounce, where each contract represents 100 troy ounces. Your initial margin to establish the position is $12,000 per contract, and the maintenance margin is $11,200 per contract. Over the subsequent four trading days, gold settles at $1,495, $1,490, $1,505, and $1,515, respectively. Compute the balance in your margin ac- count at the end of each of the four trading days, and compute your total pro t or loss at the end of the trading period. Assume that a margin call requires you to fund your account back to the initial margin requirement.

Explanation / Answer

Initial Margin = $12000

Maintenance Margin = $11200

Period Sales Price Settelment Price Margin Profit/ Loss

1 $1500 $1495 11950 -50

2 $1495 $1490 11900 -50

3 $1490 $1505 12050 150

4 $1505 $1510 12100 50

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