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 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

Intial margin = 10*12000 = 120000

Maintainence margin = 10*11200 = 112000

Intilal value = 10*100*1500 = 1500000

Position values

Day 1 value = 10*100*1495 = 1495000

Day 2 value = 10*100*1490 = 1490000 ( -5000 Loss)

Day 3 value = 10*100*1505 = 1505000 (15000 gain)

Day 4 value = 10*100*1515 = 1510000 (10000 gain)

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

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