Question #2:

The current market prices of USD to Yen is 1USD= 106.24 whereas, the USD in the future market is trading at 1USD =117Yen with contract expires in October 2020. Among many, indeed, one of reason is due to the current lockdown in the country which is adversely affecting the financial markets and investor feel more confident in buying USD as compared to investing in any financial or non-financial sector of the stock market. This immense pressure may have caused currency future shoot up. On 25-October-2020 I have purchased one currency future contract with following terms,

Quantity= $21,000

Strike price = 110 yen per USD

Contract Position = I will buy USD

Exercise Date = 30-10-2020

Initial Margin = 150,000Yen

Maintenance Margin = 90,000 Yen

Furthermore, with any change in the market information during these six days will tend to change the price of USD to YEN in market also. Assuming that following prices can be at the end of each trading day,

25-10-2020 118

28-10-2020 115

26-10-2020 117

29-10-2020 118

27-10-2020 116

30-10-2020 120

Required:

1. Using the information of daily prices changes and contract details of Quantity, Strike Price, Initial margin and Maintenance margin you are required to do the Marked to Market adjustment and show me how buyer and seller balance with clearinghouse will get effected.
2. How would you analyze if the clearing house system is removed from the above contract?
3. How much profit can be earned on the settlement date and by whom?