You are short 16 gasoline futures contracts, established at an initial settle pr

Question

You are short 16 gasoline futures contracts, established at an initial settle price of $2.12 per gallon, where each contract represents 42,000 gallons. Your initial margin to establish the position is $8,000 per contract, and the maintenance margin is $7,000 per contract. Over the subsequent four trading days, gasoline settles at $2.106, $2.134, $2.165, and $2.181, 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. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Omit the "$" sign in your response.)

   

You are short 16 gasoline futures contracts, established at an initial settle price of $2.12 per gallon, where each contract represents 42,000 gallons. Your initial margin to establish the position is $8,000 per contract, and the maintenance margin is $7,000 per contract. Over the subsequent four trading days, gasoline settles at $2.106, $2.134, $2.165, and $2.181, respectively.

Explanation / Answer

Where profit loss = number of contract*gallons per contract*(previous price-current price)

Margin account = previous day balance+-profit/loss +margin call

Margin call = number of contract *maintenance margin per contract-previous day Margin balance+-profit/loss

if previous day Margin balance+-profit/loss< number of contract *maintenance margin per contract

Day Current price Margin account Total profit /loss Margin call 0 2.12 128000 1 2.106 137408 9408 2 2.134 118592 -18816 3 2.165 112000 -20832 14240 4 2.181 112000 -10752 10752 Total loss profit= sum= -40992

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