Margin Accounts Marking to markets At the end of each day, the margin account is adjusted to reflect the investor's gain or loss a Maintenance margin An example: Charles cao
6 Charles Cao Margin Accounts ◼ Marking to markets ◼ At the end of each day, the margin account is adjusted to reflect the investor’s gain or loss ◼ Maintenance margin ◼ An example:
Operation of Margins for a Long position n Two gold futures contracts a The contract size is 100 ounces The price of gold futures is $400 per pounce a The initial margin requirement is 5% The initial margin is $2, 000 per contract or $4,000 in total The maintenance margin is $1, 500 per contract or $3,000 in total Charles cao
7 Charles Cao Operation of Margins for a Long Position in Two Gold Futures Contracts ◼ The contract size is 100 ounces ◼ The price of gold futures is $400 per pounce ◼ The initial margin requirement is 5% ◼ The initial margin is $2,000 per contract or $4,000 in total ◼ The maintenance margin is $1,500 per contract or $3,000 in total