Answer: $35 drop

## Explanation **Step 1: Calculate maintenance margin per contract** - Initial margin per contract: $14,000 - Maintenance margin = 75% × $14,000 = $10,500 per contract **Step 2: Calculate total margin requirements** - Total initial margin = 5 contracts × $14,000 = $70,000 - Total maintenance margin = 5 contracts × $10,500 = $52,500 **Step 3: Calculate maximum loss before margin call** - Maximum loss allowed = Total initial margin - Total maintenance margin - Maximum loss = $70,000 - $52,500 = $17,500 **Step 4: Calculate price drop per contract** - Contract size = 100 troy ounces - Total position size = 5 contracts × 100 ounces = 500 ounces - Price drop per ounce = Maximum loss ÷ Total position size - Price drop per ounce = $17,500 ÷ 500 = $35 **Step 5: Verify** - A $35 drop per ounce × 500 ounces = $17,500 loss - This exactly equals the maximum loss allowed before margin call Therefore, a **$35 drop** in the gold futures price will trigger a margin call.

Author: LeetQuiz Editorial Team