Oil is selling for $50/barrel currently. An independent producer decides that it is concerned about a price war and decides to enter into a futures contract to sell 1,000 barrels at $48. The buyer of the contract is a speculator that is required to put up 10% margin upon entering the contract. When the contract delivery date arrives, oil is selling at $35/barrel. a. What is the additional revenue earned by the oil producer by entering into the futures contract? b. Ignoring likely interim margin calls, what is the speculator's loss in dollars and as % of initial investment (margin amt)? a. Barrels sold in futures market Futures price per barrel "Spot" price per barrel Incremental revenue 1000 48 35 Market price at time of oil delivery 13,000 $ 10% 4,800 $ b. Initial margin requirement % Initial margin requirement $$ Value of futures contract at delivery Cost of futures contract Loss $$ Return %