3) You are long 8 gold futures contracts, established at an initial settle price

Question

3) You are long 8 gold futures contracts, established at an initial settle price of $1,240 per ounce, where each contract represents 100 troy ounces. Your initial margin to establish the position is $13,000 per contract, and the maintenance margin is $12,200 per contract. Over the subsequent four trading days, gold settles at $1,230, $1,220, $1,305, and $1,320, respectively. Compute the balance on your margin account at the end of each of the four trading days, and compute your total profit 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 Purchase Price =$1,240/ounce

Number of Gold Contracts Purchased =8

Initial Margin Required =$13,000 x 8 =$104,000

Maintenance Margin Required =$12,200 x 8 =$97,600

Open Price Close Price Change Total Loss/Gain Maintenance Margin Balance Day-1 1240 1230 -10 -8,000 97,600-8000 =89,600 Day-2 1230 1220 -10 -8,000 91,600-8000 =81,600 Day-3 1220 1305 +85 68,000 81,600+68,000=149,600 Day-4 1305 1320 +15 12,000 149,600+12,000=161,600

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.