Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

3. The table below shows settlement prices for natural gas futures. One contract represents 10,000MMBtu. Prices are quoted in dollars and cents per MMBtu, out

image text in transcribed
3. The table below shows settlement prices for natural gas futures. One contract represents 10,000MMBtu. Prices are quoted in dollars and cents per MMBtu, out to three digits, e.g, "tenths of a cent." The initial performance bond for one contract is $5,500. The maintenance performance bond is $5,000. A trader enters the market on Monday, January 3 at 10:00 am at a price of $3.594 in a short position for three (3) contracts. (a) How much money did the trader make or lose on their first day of trading? (c) If a margin call or calls were issued, on what day or days were they issued? How much money was the trader required to provide to their brker (assume they deposit the minimum required amount)? (d) Assuming the trader got into the market on Monday, January 3 at 10:00 am at a price of $3.594 and stayed in the market until the end of the day on Friday, January 7, what was their gain or loss? Show or explain how you got your answer. (e) What would the trader's gain or loss have been if they had chosen to wait until the end of the day on January 3 to enter the market, i.e., the entered when the price was $3.554/MMBtu. (f) Go back to the original problem (ignore the question in part e). If the trader had traded one contract

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Using Equity Audits In The Classroom To Reach And Teach All Students

Authors: Kathryn B. McKenzie, Linda E. Skrla

1st Edition

141298677X, 978-1412986779

More Books

Students also viewed these Accounting questions