In practice, a wheat futures contracts calls for the delivery of 5000 bu (bushels) of wheat (the size of the contract is 5000 bu). The price is quoted in cents and the tick size (minimum trading price move) is 0.25 cents ( worth $12.50 = 5000 x 0.25 cents ). On January 14, 1999, the open, high, low and close prices are 274, 277.5,274, and 276.5 for the March contract.

a) If you buy one wheat futures at the open, how much money will you make at the end of the day?

b) If the initial margin and maintenance margin are $950 and $700 for trading one wheat futures contract (slightly different at different futures brokerages) how much money do you need in your account to trade the wheat contract?

c) If you buy one wheat futures at the open on 1/14/99, you will lose money when the price goes down in the following days. Starting with $1000, at what price level will you receive the margin call?

d) How much money do you need to never receive a margin call?