Question

You purchased 2 Soybean Oil futures contracts today at the settlement price (labeled as “Settle”) listed as following.            

Soybean Oil (CBT) 60,000 lbs.; cents per lb.
						Lifetime
	Open	High	Low	Settle	Change	High	Low	Open Interest
Oct.	15.28	15.33	15.25	15.29	-.02	20.35	15.25	7,441

Part I.

If there is a 10% initial margin requirement on total value of underlyings, how much do you have to deposit? Maintenance margin requirement is $600 for each contract. In what situation will you receive a margin call from your broker?

Part II.

Assume the volatility of Soybean Oil immediately increases 20%. How will it impact Futures price? How will it impact investor’s margin account requirement? Explain your answer.

Answer 1

Answer :