PQU stock trades for $56/share on 9/30, but you believe the stock price will dec

Question

PQU stock trades for $56/share on 9/30, but you believe the stock price will decline over the next few days. You decide to use five futures contracts to trade based on your belief. Futures contracts on PQU have 125 shares attached. The price for PQU futures on 9/30 is $54/share. Your broker requires an initial margin of $3000 per contract and a maintenance margin of $1500 per contract.

How much money must you place in your margin account to open your position on 9/30?

6750

7000

7500

15000

6750

7000

7500

15000

Explanation / Answer

Amount to be kept in Margin account = Margin per contract * No.of contracts

= $ 3000 * 5

=$15,000

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