Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

This is one whole problem On April 3, trader M, SHORTED two (2) gasoline futures for dellvery month May for the market price of cents67.85/

This is one whole problem
image text in transcribed
image text in transcribed
On April 3, trader M, SHORTED two (2) gasoline futures for dellvery month May for the market price of cents67.85/ gallon. There are 42,000 gallons in one futures. he required initial and maintenance margins per gasoline futures are as follows: There are 42,000 gallons in one contract. Futures prices are given in cents/gallon. 2. Trader M held the short ( 2 May) futures position until April 12 without trading. 3. On April 12, M offset the ( 2 May) futures position at the settle price of cents70.11/gallon. Also on April 12, M deposited enough money to bring the margin to $5,000. M did not withdraw the $5,000 from the margin account and did not trade until April 18. 4. On April 18, M SHORTED four (4) June gasoline futures for cents69.33/gallon and deposited $3,000 in the margin account to satisfy the initial margin requirement of (4)($2,000)=$8,000. (Recall that M kept $5,000 in the margin account.) 5. M did not trade on April 19 and April 20. On April 21,M quit the market by offsetting the short ( 4 June futures) position for the market price of cents 71.18/ gallon and withdrew the funds from the margin account. Again: the prices in the table are in cents per gallon. On April 3, trader M, SHORTED two (2) gasoline futures for dellvery month May for the market price of cents67.85/ gallon. There are 42,000 gallons in one futures. he required initial and maintenance margins per gasoline futures are as follows: There are 42,000 gallons in one contract. Futures prices are given in cents/gallon. 2. Trader M held the short ( 2 May) futures position until April 12 without trading. 3. On April 12, M offset the ( 2 May) futures position at the settle price of cents70.11/gallon. Also on April 12, M deposited enough money to bring the margin to $5,000. M did not withdraw the $5,000 from the margin account and did not trade until April 18. 4. On April 18, M SHORTED four (4) June gasoline futures for cents69.33/gallon and deposited $3,000 in the margin account to satisfy the initial margin requirement of (4)($2,000)=$8,000. (Recall that M kept $5,000 in the margin account.) 5. M did not trade on April 19 and April 20. On April 21,M quit the market by offsetting the short ( 4 June futures) position for the market price of cents 71.18/ gallon and withdrew the funds from the margin account. Again: the prices in the table are in cents per gallon

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Globalization Gating And Risk Finance

Authors: Unurjargal Nyambuu, Charles S. Tapiero

1st Edition

1119252652, 978-1119252658

More Books

Students also viewed these Finance questions

Question

What are the errors that do not affect the trial balance??

Answered: 1 week ago

Question

Explain the process of MBO

Answered: 1 week ago