Gold Futures Contract:

Each gold futures contract represents 100 ounces and requires an initial margin of $4,950 and a maintenance margin of $4,500. A trader sells ten December futures contracts on gold at 1819.39.

Under what circumstances could $3,000 be withdrawn from the margin account?
Please enter the price below which $3,000 could be withdrawn and round your answer to the nearest hundredth.

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Crude Oil Futures Contract:

1. A trader buys five July futures contracts on crude oil. Each contract is for the delivery of 1,000 barrels. The current futures price is 20.9 dollars per barrel, the initial margin is $9,000 per contract, and the maintenance margin is $6,500 per contract.

Under what circumstances could $5,000 be withdrawn from the margin account?
Please enter the price above which $5,000 could be withdrawn and round your answer to the nearest hundredth.

2. A trader buys five July futures contracts on crude oil. Each contract is for the delivery of 1,000 barrels. The current futures price is 97.7 dollars per barrel, the initial margin is $9,000 per contract, and the maintenance margin is $6,500 per contract.

What price change would lead to a margin call?
Please enter the price below which a margin call will be triggered. Round your answer to the nearest hundredth.

To determine the price below which $3,000 could be withdrawn, we need to calculate the equity in the margin account. The equity is the difference between the account balance and the maintenance margin requirement.

Equity = Account Balance - Maintenance Margin

Initially, the account balance is the initial margin requirement:

Account Balance = Initial Margin Requirement = $4,950 * 10 = $49,500

The equity is: Equity = $49,500 - $4,500 * 10 = $49,500 - $45,000 = $4,500

To withdraw $3,000 from the margin account, the equity should still exceed $4,500 - $3,000 = $1,500.

To find the corresponding price, we divide the equity by the number of contracts and the contract size:

Price = Equity / (Number of Contracts * Contract Size)

= $1,500 / (10 * 100)

= $1.50

Therefore, the price below which $3,000 could be withdrawn is $1.50.

For the second scenario with crude oil futures contracts:

Each crude oil futures contract represents 1,000 barrels.

Initial margin = $9,000 per contract.

Maintenance margin = $6,500 per contract.

Trader buys five July futures contracts on crude oil.

Current futures price = $20.9 per barrel.

To determine the price above which $5,000 could be withdrawn, we follow a similar process as above.

Account Balance = Initial Margin Requirement = $9,000 * 5 = $45,000

Equity = Account Balance - Maintenance Margin

= $45,000 - $6,500 * 5 = $45,000 - $32,500 = $12,500

To withdraw $5,000 from the margin account, the equity should still exceed $5,000.

Price = Equity / (Number of Contracts * Contract Size)

= $5,000 / (5 * 1,000)

= $1.00

Therefore, the price above which $5,000 could be withdrawn is $1.00.

For the third scenario with crude oil futures contracts:

Each crude oil futures contract represents 1,000 barrels.

Initial margin = $9,000 per contract.

Maintenance margin = $6,500 per contract.

Current futures price = $97.7 per barrel.

To determine the price below which a margin call will be triggered, we calculate the equity based on the maintenance margin requirement.

Account Balance = Initial Margin Requirement = $9,000 * 5 = $45,000

Equity = Account Balance - Maintenance Margin

= $45,000 - $6,500 * 5 = $45,000 - $32,500 = $12,500

The equity must be greater than or equal to zero to avoid a margin call.

To find the corresponding price, we divide the equity by the number of contracts and the contract size:

Price = Equity / (Number of Contracts * Contract Size)

= $12,500 / (5 * 1,000)

= $2.50

Therefore, the price below which a margin call will be triggered is $2.50.

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