Question

You enter into a short position in one gold futures contract worth $500 per ounce. Contract size is 100 ounces. The initial margin is $2,500 per contract and the maintenance margin is $1,500 per contract. If the market closes at $497.50 per ounce at the end of the day, what is the balance on your margin account?

Answer 1

No of futures=   1  
Contract size=   100   ounces
Short selling rate    $500   per ounce
Value of short sales = 100*500=   50000.00  
closing rate or buying rate = 497.5   per ounce
Initial margin =   $2,500  
maintenace Margin =   $1,500  

Profit or loss on future position =(Seling rate - buying rate)*contact size*No of futures      
(500-497.5)*100*1   

=250.00      

+ Sign means there is Profit of $250

from profir, Margin will be added by profit of $250.  

balance in margin account=   initial margin + Profit  
2500+250=   $2,750  
So balance on margin Account is    $2,750  
      

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