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

Question

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 Margin          13,000 per contract No of contract                     8 Contract Total Initial Margin      1,04,000 Maintenance Margin          12,200 per contract No of contract                     8 Contract Total Initial Margin          97,600 Initial Price Settle Price ounce per contact Initial Margin per contact No of contract Balance of Margin A B C D E (C*(B-A)-D)*E                                 1,240            1,495             100          13,000                 8        1,00,000                                 1,240            1,490             100          13,000                 8            96,000                                 1,240            1,505             100          13,000                 8        1,08,000                                 1,240            1,515             100          13,000                 8        1,16,000

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