Question

You took a short futures position in 10 contracts, covering each 100 ounces of gold at a price of $276.5 per ounce. The initial and the maintenance margin requirement are respectively $1500 and is $1100 per contract. No withdrawal in any excess margin will be made. Ignore any interest on the balance.

(b) The settlement prices per ounce of gold at the end of days 1, 2 and 3 are respectively $278, $281 and $276. Complete the table below assuming the contract is purchased at the settlement price of that day. [20]

Day	Beggining Balance	Funds Deposited	Futures Prices	Price Change	Gain/Loss	Ending Balance
0
1
2
3

Answer 1

Day	Opening Balance	Funds Deposited	Future Prices	Price Change	Gain/Loss	Closing Balance
0	-	(10*100*276.5)+ (10*1500) = 2,91,500.0	276.5			2,91,500.0
1	2,91,500.0	-	278.0	-1.5	-1,500.0	2,90,000.0
2	2,90,000.0	-	281.0	-3.0	-3,000.0	2,87,000.0
3	2,87,000.0	-	276.0	5.0	5,000.0	2,92,000.0