Consider the following information about the CMX gold futures contract: (a) Contract size: 100 troy ounce Initial margin:...

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Finance

Consider the following information about the CMX gold futurescontract:
(a) Contract size: 100 troy ounce
Initial margin: $1,013 per contract
Maintenance margin: $750 per contract
Minimum tick size: 10 cents/troy ounce ($10/contract)
There are four traders, A, B, C, and D in the market when nextyeariÌs June contract commences trading. (Kolb Ch3)
(a) Complete the following table showing the open interest forthe contract.
Date
Buyer
Seller
Contracts
Price
Open Interest
July 6
A
B
5
$294.50
July 6
C
B
10
$294.00
July 6
Settlement Price
$294.00
July 7
D
A
10
$293.50
July 7
B
D
5
$293.80
July 7
Settlement Price
$293.80
July 8
B
A
7
$293.70
July 8
Settlement Price
$299.50
(b) Calculate the gains and losses for Trader A. Assume that atthe time of each change in position, Trader A must bring the marginback to the initial margin account. Compute the amount in TraderAiÌs margin account at the end of each trading day. Will Trader Aget a margin call? If so, when and how much additional margin mustbe posted?

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4.2 Ratings (817 Votes)

As the problem didnt told about the brokerage so we are ignoring the brokerage when ever we need to calculate the profits in the solution a open interest means the number of contracts of a stock or commodity presently in open position in the market in futures and option contracts transactions july 6th B sells A 5 contracts means open interest is 5 A long side and B short side of same contracts B sells C 10 contracts means See Answer

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Consider the following information about the CMX gold futures contract: (a) Contract size: 100 troy ounce Initial margin:...

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Finance

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Date	Buyer	Seller	Contracts	Price	Open Interest
July 6	A	B	5	$294.50
July 6	C	B	10	$294.00
July 6	Settlement Price	$294.00
July 7	D	A	10	$293.50
July 7	B	D	5	$293.80
July 7	Settlement Price	$293.80
July 8	B	A	7	$293.70
July 8	Settlement Price	$299.50