Question
Ryan Cole is a currency trader in the futures market. Ryan is a specialist in USD and GBP currency pair. Based on his own analysis,
Ryan Cole is a currency trader in the futures market. Ryan is a specialist in USD and GBP currency pair. Based on his own analysis, USD will depreciate against GBP in the coming days, but he is not sure how much depreciation would be. Since he is not very sure about the level of USD/GBP currency movement therefore he decided to take long position in the USD/GBP currency pair. Once contract is equivalent to GBP 62,500. Initial margin is 5 percent and maintenance margin is 3 percent of the current value. Futures contract is marked to market daily.
If the future spot rates move in the following direction, then what will be Ryans equity every day?
Will he get margin call (to make it up to the initial margin requirement)? Show his daily position with full details.
Day | Exchange rate |
0 | $1.36/ |
1 | $1.37/ |
2 | $1.34/ |
3 | $1.31/ |
4 | $1.29/ |
5 | $1.25/ can you show me the solution for this question?(calculation steps) Thanks!!!! |
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