1. In–Class Exercise
Suppose you wish to purchase 30 May corn futures contracts. The current price of the May contract is $3.70/bushel (see earlier slide for contract size). You wish to withdraw all gains that exceed $1000 over your initial margin. Complete the following mark-to-market schedule assuming a 75% maintenance margin of the 5% initial margin:
Day
Futures Price
Daily Gain/Loss
Cumulative Gain/Loss
Margin Account Balance
Maintenance Call Made?
(at $______) If so, how much needs to be deposited?
Initial
$3.70
N/A
Feb 16
$3.68
Feb 17
$3.75
Feb 18
$3.71
Feb 19
$3.63
Feb 20
$3.69