An investor sells short a December Dow (DJIA) future contract at the price of 27,870.0. At...

An investor sells short a December Dow (DJIA) future contract at the price of 27,870.0. At the end of the day and the following three days, the contract settles at 27,890.0; 27,810.5; 28,080.5; 27,810.0; The contract multiple is $10, the initial margin is $10,000 and the maintenance margin is $8,000. Calculate the inventor’s margin account at the end of the each of the four days and the profit of the trade.

Expert Solution

Initial price = 27,870.0

Initial margin = $10,000

Contract multiple = $10

Screenshot with formulas

Profit of the trade = (Initial price - Day 3 Price) * Contract multiple

Profit of the trade = (27,870 - 27,810) * 10

Profit of the trade = $600

jeff jeffy answered 2 years ago

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