Question
You think bitcoin is afad, and an overvalued one at that. You short thee bitcoin futurescontracts, each of which has five bitcoins as the underlyingasset,
You think bitcoin is afad, and an overvalued one at that. You short thee bitcoin futurescontracts, each of which has five bitcoins as the underlyingasset, at a price of $6 comma 403
6,403. A month later the same contract sells for $6 comma 053
6,053. What is your dollar profit and your return on invested capital if you had to make an initial margin deposit of $41 comma 389
41,389? What was the initial margin deposit relative to the value of the contracts you soldshort? Does that percentage seem higher than the margin requirements of otherassets? Ingeneral, what characteristic of bitcoin might lead the futures exchange to require a high initialmargin?
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