Answer: July 1, July 2 and July 7 only

The correct answer is **C: July 1, July 2 and July 7 only**. ### Explanation (Step-by-Step Margin Account Tracking) John's position: Long **2 December silver futures contracts** (note: the question says "gold" once but the table and contract details clearly refer to **silver** futures). - Contract size: 5,000 ounces per contract → Total position size = **10,000 ounces**. - Purchase price (June 29): **USD 18.62/oz**. - **Initial margin** = **USD 6,000** (deposited at the start). - **Maintenance margin** = **USD 4,500**. A **margin call** occurs on any day when the margin account balance **falls below the maintenance margin** of $4,500. The daily gain/loss is credited/debited to the margin account at the end of each trading day (marked-to-market). Here is the day-by-day calculation of the margin account balance: | Day | Futures Price | Daily Gain/Loss | Margin Balance | Below $4,500? | Margin Call? | |----------|---------------|-----------------|----------------|---------------|--------------| | June 29 | 18.62 | 0 | **6,000** | No | No | | June 30 | 18.69 | +700 | **6,700** | No | No | | **July 1** | 18.03 | **-6,600** | **100** | **Yes** | **Yes** | | **July 2** | 17.72 | **-3,100** | **-2,900** | **Yes** | **Yes** | | July 6 | 18.00 | +2,800 | **-100** | Yes (still below) | No (already called previously; no new call unless restored and drops again) | | **July 7** | 17.70 | **-3,000** | **-3,100** | **Yes** | **Yes** | | July 8 | 17.60 | -1,000 | **-4,100** | Yes | No (no new call) | ### Key Points on Margin Calls - Margin calls are triggered **only on the days the balance first drops below maintenance** (or drops below again after being restored to initial margin). - After the margin call on **July 1**, the account is deeply underwater. The further loss on **July 2** keeps it below maintenance → another call. - On **July 6**, the gain of +$2,800 improves the balance but **does not** bring it back to the initial margin level of $6,000. Therefore, no variation margin is required to "reset," and the account remains below maintenance (no additional call triggered). - The loss on **July 7** causes the balance to drop further below maintenance → a **new margin call**. - The small additional loss on **July 8** does **not** trigger a separate new call (the account was already below maintenance). Thus, John receives margin calls on **July 1, July 2, and July 7 only**. **Answer: C** This is a classic FRM Part 1 futures/margining question testing understanding of daily settlement, maintenance margin triggers, and when repeated calls occur.