The closing price from yesterday\'s S&P500 index in 1300. If the margin requirem

Question

The closing price from yesterday's S&P500 index in 1300. If the margin requirement is 10% of the futures price times that multiplier of $250, and you took a long position in the futures contract based upon yesterday's closing (settle) price, what would your return be over one day if the closing price the next day is 1375 (investigate what these quotes are in dollars). Explain.

The closing price from yesterday's S&P500; index is 1300. If the margin requirement is 10% of the futures price times the multiplier of $250, and you took a long position in the futures contract based upon yesterday's closing (settle) price, what would your return be over one day if the closing price the next day is 1375 (investigate what these quotes are in dollars)?

Explanation / Answer

Yesterday's closing price= 1300

Deposited Initial margin= 10%of1300*250= $32500

Today's closing price = 1375

gain on futuresis given by: change in price * multiplier

(1375-1300)*250= $18750

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