Question

You enter into a short crude oil futures contract at $43 per barrel. The initial margin is $3,375 and the maintenence margin is $2,500. One contract is for 1,000 barrels of oil. By how much do oil prices have to change before you receive a margin call

Answer 1

Answer:

The correct answer is "43.875". A further explanation is provided below.

Explanation:

The given values are:

Initial margin,

= $3,375

Maintenance margin,

= $2,500

Barrels of oil,

= 1,000

Now,

The loss on the position will be:

= $3375-2500$

= $875$ ($)

then,

⇒  $1000 (P - 43) = 875$

⇒  $1000P-43000=875$

On adding "43000" both sides, we get

⇒  $1000P-43000+43000=875+43000$

⇒                             $1000P=43875$

⇒                                    $P=\frac{43875}{1000}$

⇒                                        $=43.875$