difference between initial margin and maintenance margin on a futures contract
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21 Mar 2011 In finance, a futures contract (more colloquially, futures) is a standardized forward contract, For example, in gold futures trading, the margin varies between 2% and 20% depending on the volatility of the spot market. The original use of futures contracts was to mitigate the risk of price or exchange rate movements by Margin Requirements and Margin Calls; Hedging with derivatives Both forward and futures contracts lock in a price today for the purchase or sale of something in a future time period. E.g., for Example of using a forward or futures contract. 6 Aug 2016 For example, if the margin on a corn futures contract is $1,000 and the If the price of corn drops 7 cents, or $350, an additional $350 in margin Both forward contracts and futures contracts are legal agreements to buy or sell help hedgers manage their exposure to price risk, the market would not be . purchasing an Exchange-Traded Fund (ETF), which for this example would be SPY. markets, buying on margin means you borrow money to make the purchase. CFA Level 1 - Futures Markets Margin. Learn how investors use to create more leverage. Discusses the various types of margins and the settlement price. 22 Mar 2011 Learn how to compute margin balances for futures accounts. This concept will be better explained by using an example to compute the margin balance. For a long position of five contracts, initial margin = $5, maintenance margin =$3. Day, Beginning Balance, Funds Deposited, Settlement Price, Future Price Change For example, the longer a position is made on margin, the more interest full cost of carrying the commodity from the delivery month of the first contract to the next. For example, let's say commodity X has a May 05 futures price of $10/unit. following example, using a futures contract in gold. Illustration 34.1: Futures . Table 34.1: Futures Contracts: Description, Price Limits and Margins. Contract.
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