Seth McDonald grows corn. In May, he decides to sell 3 contracts, about half of his expected crop, ...
[html]Seth McDonald grows corn. In May, he decides to sell 3 contracts, about half of his expected crop, for December delivery. The contract price is $3.65 per bushel and the contract size is 5,000 bushels. Shortly before the delivery date, corn i
Logan sold a corn futures contract using the initial margin of $2,700. His maintenance margin is ...
[html]Logan sold a corn futures contract using the initial margin of $2,700. His maintenance margin is $2,000. The price of corn began to rise in early summer, but Logan wants to keep his contract. When his margin falls below $2,000 (minimum maint
In the futures markets, gains and losses in a contract's value are calculated every day and added ...
[html]In the futures markets, gains and losses in a contract's value are calculated every day and added to or subtracted from the trader's account. This procedure is called
Eric has just purchased a heating oil contract at $2.05 per gallon. The contract size is 21,000 ...
[html]Eric has just purchased a heating oil contract at $2.05 per gallon. The contract size is 21,000 gallons. Initial margin is $6,075; maintenance margin is $4,500. If the price of heating oil is $2.15 when the contract expires, Eric's percentage
Eric has just purchased a heating oil contract at $2.05 per gallon. The contract size is 21,000 ...
[html]Eric has just purchased a heating oil contract at $2.05 per gallon. The contract size is 21,000 gallons. Initial margin is $6,075; maintenance margin is $4,500. If the price of heating oil is $2.15 when the contract expires, Eric's profit or
BBC Inc. needs to quote a price at which it will sell oatmeal to a large supermarket chain next ...
[html]BBC Inc. needs to quote a price at which it will sell oatmeal to a large supermarket chain next year. It can limit the risk from an increase in the price of oats next year by
Fred has just sold short 3 contracts of May wheat on the CBT. These are 5,000 bushel contracts. The ...
[html]Fred has just sold short 3 contracts of May wheat on the CBT. These are 5,000 bushel contracts. The initial deposit is $1,500 per contract with a maintenance margin of $1,200.
All futures contracts are traded on a margin basis. What does "margin" mean, and how does the use ...
All futures contracts are traded on a margin basis. What does "margin" mean, and how does the use of margin affect the inherent risk-return nature of the futures market?
Futures trading requires large amounts of capital because the buyer of a contract must deposit the ...
Futures trading requires large amounts of capital because the buyer of a contract must deposit the full settlement price of the contract at the time of purchase.
Futures contracts obligate a participant to buy or sell the commodity at the contracted price unless ...
Futures contracts obligate a participant to buy or sell the commodity at the contracted price unless the contract is cancelled or liquidated before the expiration date.
Because a futures contract deals with very large trading units, even a modest price change in the ...
Because a futures contract deals with very large trading units, even a modest price change in the price of the underlying commodity can have a large impact on the market value of the contract.