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Mr. Berry is an oil consumer. He would like to secure the price for his future oil needs. He decides to buy oil future contract
Mr. Berry is an oil consumer. He would like to secure the price for his future oil needs. He decides to buy oil future contract at SAFEX. Details of the futures contract are as follows:
Details | |
Date of contract | 1 November |
Futures contract price | R 800 per barrel |
Size of contract | 3 contracts at 1 barrel per contract |
Close-out date/maturity date | 3 November |
The Initial margin | R 500 per contract |
The Maintenance margin | R 400 per contract |
The following market prices are recorded per barrel : 1 November R 1000 2 November R 1300 3 November R 900 |
Required: Prepare the mark-to-market account for Mr. Berry. Clearly show the balance in the margin account at the end of each of the three trading days.
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