Speculation with a futures contract Before any trading, George begins with a margin account balance of $0. On May 1, George believes that silver will appreciate in the next 4 days. On May 1, George takes a long position in a futures contract for silver with a futures price of $10/ounce. Each contract is for 1000 ounces of silver. The initial margin is $3000 and the maintenance margin is $2500. On May 2, the settlement futures price is $9.80/ounce. On May 3, the settlement futures price is $9.10/ounce. On May 4, George offsets with a futures contract with a futures price of $9.40/ounce. Note that all contracts are for silver with delivery date of May 25. After George offsets on May 4, what is his margin account balance? Show how you calculate your answer.
Speculation with a futures contract
Before any trading, George begins with a margin account balance of $0. On May 1, George believes that silver will appreciate in the next 4 days. On May 1, George takes a long position in a futures contract for silver with a futures price of $10/ounce. Each contract is for 1000 ounces of silver. The initial margin is $3000 and the maintenance margin is $2500. On May 2, the settlement futures price is $9.80/ounce. On May 3, the settlement futures price is $9.10/ounce. On May 4, George offsets with a futures contract with a futures price of $9.40/ounce. Note that all contracts are for silver with delivery date of May 25. After George offsets on May 4, what is his margin account balance?
Show how you calculate your answer.
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