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Assume that on January 27, 2016, using news from any source you instruct your broker to take either a Long or a Short position in two (2) June (or July) futures contracts of a specific commodity traded on GLOBEX. Examples are Corn, Crude Oil, Live cattle etc. See Table 2.2 in your text and the online resources for other examples. You should take the same position in the two contracts, i.e. either buy 2 June (or July) Futures contracts or sell (short) 2 June (or July) futures contracts. Using Table 2.1 as an example and the daily data available from online/printed resources show how your margin account would be adjusted on a daily basis. The Margin requirements are available from the online resources. In your report include a sentence or two to support your initial “trade”, i.e. why you chose to take a long/short position initially in addition to your table. Note that the example in your text is for a Long position. If you start with a Short position, price changes will have an opposite effect on your gains/losses. Hint: You will need to use the specifications from the Exchange to know what the margin requirement is and the quantity of the commodity underlying each contract.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M91725971

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