You enter into a long futures position in 1 contract in gold at a futures price of Rs 8,400,000 per kg. You purchased one kg gold futures. The…
BBA Financial Derivatives · 2024 · Solved Question with Answer
You enter into a long futures position in 1 contract in gold at a futures price of Rs 8,400,000 per kg. You purchased one kg gold futures. The contract size is 1 kg. The broker requires Rs 200,000 initial margin deposit per contract and a maintenance margin is 150,000 per contract.
| Day | 1 | 2 | 3 | 4 | 5 |
| Settlement price (Rs) | 8,380,000 | 8,304,000 | 8,300,000 | 8,650,000 | 8,350,000 |
Calculate the daily gain or loss, cumulative gain or loss, margin balance and margin call if any. Determine the price level that would trigger a margin call. If investor does not deposit margin call amount, what will happen?