Explanation:
The price has increased by $1.5 (from $108 to $109.5). Because you have a short position, you lose $1.5 × 1,000 = $1,500. The balance in the margin account therefore goes down from $6,000 to $4,500. However, there is no margin call since the margin account balance ($4,500) is still above the maintenance margin level of $3,000.
Q.5039 You sell one December Brent Crude Oil futures contract when the futures price is $108 per gallon. Each contract is on 1,000 gallons, and the initial margin per contract that you provide is $6,000. The maintenance margin per contract is $3,000. During the next day, the futures price rises to $109.5 per gallon. What is the balance of your margin account at the end of the day?
A
$1,500
B
$7,500
C
$4,500
D
$9,000
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