Question

You take a long position in one gold futures contract. The contract size is 100 ounces....

You take a long position in one gold futures contract. The contract size is 100 ounces. The initial margin requirement is $5,000. The current futures price is $1,200/ounce. At the end of the 1st day of trading, the futures price is $1,190/ounce. At the end of the 2nd day of trading, the futures price is $1,192/ounce. What is the trader's daily gain or loss on day 1? Group of answer choices

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Answer #1

Daily gain of loss on day 1 = (current future price per ounce-Future price on day 1)*no. Of contract*contract size)

Current price = $1200/ounce

Price on day 1= $1190/ounce

No. Of contract =1

Size of contract =100

Daily gain/(loss)= ($1200-$1190)*1*100

Daily gain/(loss)= -$10*1*100

Daily gain/(loss) = -$1000

The loss on day 1 is $1000

The margin initially deposited will be paid back on closing the contract.

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